Amidst the recent U.S. banking crisis, speculations about Central Bank Digital Currency (CBDC) adoption have been intensifying. However, Castle Island Ventures’ General Partner, Nic Carter, believes that the crisis was a tactic to hasten the implementation of CBDCs. Carter has expressed concerns about the potential crisis exploitation to expedite CBDC adoption.
According to Carter, the weekend turmoil strengthened the case for CBDCs as people no longer trust commercial banks. CBDCs offer a direct link between people and the central bank, eliminating the need for intermediaries. Moreover, There are multiple models of CBDCs, one of which is the “wholesale” model that relies on banking intermediaries.
However, as further details of the banking crisis emerge, Carter’s assessment holds more weight. On Mar 9, Silvergate announced the winding down of its operations due to liquidity issues. The “crypto-bank” faced difficulties as withdrawals surged, forcing the sale of assets at a loss to meet withdrawal obligations. Increasing demand for fund withdrawals resulted in the selling of assets, leading to losses for the crypto-bank.
The Federal Deposit Insurance Corporation (FDIC) took control of the situation. Silicon Valley Bank on Mar 10, and New York regulators shut down Signature Bank on Mar 12. The incidents sparked discussions. It is puzzling how The 16th largest bank in the U.S. (This question is a repetition of a previous question. It could become so vulnerable, mainly because it is still well-capitalized.
In response to the crisis, the Fed announced its Bank Term Funding Program (BTFP), which The program will lend financial institutions the assets’ par value. Ensuring the system remains sufficiently liquid. However, Barney Frank, a board member of Signature Bank and former US representative, informed CNBC that the bank had no insolvency issues despite its arbitrary seizure. Frank attributed this to regulators wanting to smear the crypto industry.
CBDC Adoption & Accusations Of An Intentional Plot
Allegations of a smear campaign against cryptocurrencies are surfacing, lending credibility to Carter’s belief that the crisis is a ploy to hasten CBDC adoption. Additionally, Carter’s suspicions gain more weight as more evidence emerges about a potential scheme to accelerate the adoption of CBDCs. With the political case for CBDCs becoming more assertive, the future of the banking industry remains uncertain.
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In conclusion, while the U.S. banking crisis has caused turmoil, it has also intensified speculations about CBDC adoption. Moreover, People’s trust in commercial banks is declining, and CBDCs offer a solution by removing intermediaries and creating a direct connection between individuals and the central bank. The banking sector’s future is uncertain, and as more crisis-related information comes to light, it remains to be seen if CBDCs will come to fruition.
The author’s views are for reference only and shall not constitute investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing
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