A New Wild West: State-backed digital money

With assistance from Derek Robertson

Cryptocurrency lending firm Genesis collapses Late Thursday it dealt another blow to cryptocurrency’s ambitions to conquer the world last week – but that doesn’t mean the global financial system is immune from technological disruption just yet.

As the venture capital-backed cryptocurrency industry continues to derail, the state-backed effort to create a new technology-backed monetary system begins in 2023 with full head of steam.

Governments and central banks around the world are seeking digital upgrades to their currencies, often incorporating distributed ledger technology used by cryptocurrencies as they do so. Many of them see the occasion as an opportunity to search for alternatives to the dollar-dominated global monetary system.

Over the past year, the cryptocurrency craze has combined with inflation fears and the expanded use of Western sanctions against Russia to make potential shifts in the monetary system a hot topic in global affairs. Western monetary authorities intensified their efforts to fend off new competitors, while countries such as Russia, Iran and China saw new technologies as an opportunity to lower the price of the dollar.

As private crypto projects falter, These state-led efforts could take center stage in 2023.

Some of the changes afoot are decidedly out of date: central banks bought record amounts of gold in the third quarter of last year, and last month it was revealed that some Expired in the vaults of China.

But much of the change is coming forward on the technical side, including the development of central bank digital currencies, which often include distributed ledgers similar to those first used by non-state cryptocurrencies.

The latest eye-catching scheme is being rolled out a little bit of both. Reports from Russia last week indicate that officials in the country are in discussions with their counterparts in Iran about creating a dossier A gold-backed stablecoin To facilitate trade between the two countries.

Washington welcomes the idea of ​​a “back to the future” with skepticism. Rich Goldberg, a senior advisor at the Hawks Foundation for Democracies, said it was too early to say whether this was “hype” or a “reliable transactional channel.”

“I put this in the category of a ‘manifesto to annoy the West’ as opposed to the actual means of trade,” said another Washington, D.C. think tank.

But less unusual efforts Using digital promotions as an opportunity to explore alternative monetary arrangements is gaining serious ground. (Not to mention the efforts of the United States to develop a Digital dollar)

Posted by Credit Suisse analyst Zoltan Bozar article in the Financial Times on Friday that highlights what he sees as a growing threat to the dollar’s hegemony from central bank digital currencies, or CBDCs.

wrote Bozar, who made waves last March with a remark that predicted the birth of a new global monetary system that would see the greatest role for bitcoin, gold and other commodities.

In his latest article, Bozar predicts that these non-Western CBDCs will increasingly tie central banks directly together, bypassing the dollar-based banking system.

What that tells us is not just the sheer number of CBDC trials in the works right now, but also the types of projects, said Ananya Kumar, associate director for digital currencies at the Atlantic Council.

It said that wholesale CBDCs, which are designed for interbank payments, have a greater potential to disrupt the structure of the monetary system, than retail CBDCs, which are designed to be used by individual citizens.

Kumar estimates that in the past year the number of serious wholesale CBDC trials has nearly doubled from around six to a dozen, something she sees as a sign of growing interest in de-dollarization.

On Thursday, at the World Economic Forum in Davos, a Hong Kong-based company is working with the Chinese government Unveil a competitor to the Belgium-based Swift network – which currently dominates interbank payments – designed to work with central bank digital currencies.

Then there is MBridge, a collaboration between the Bank for International Settlements and the monetary authorities of Hong Kong, Thailand, the United Arab Emirates and China. Using a distributed ledger, it seeks to create a common digital infrastructure that works with multiple CBDCs.

This fall, the project’s backers completed a six-week trial period project and made clear their intention to continue pursuing it.

Their report on the pilot I concluded that Their ultimate goal is “realistic and achievable”.

These two words are rarely associated with cryptocurrencies. But governments around the world are seizing the opportunity to co-opt their core technology aspects in pursuit of a vision of the future of money that is a touch less radical than Satoshi Nakomoto’s.

Perhaps this Congress is still youngbut there is already tension within it over the Biden administration’s approach to AI policy.

As POLITICO’s Mallory Cohan wrote in this morning’s Morning Tech newsletter for Pro subscribers, two GOP members of Congress sent e-mail Late last week to Arati Prabhakar, director of the White House Office of Science and Technology Policy, they expressed concern that the Biden White House blueprint for the AI ​​Rights Act sends “conflicting messages about US federal AI policy.”

Namely, Reps. Frank Lucas (R-Oklahoma) and James Comer (R-Kentucky) have indicated that it may conflict with instructions from NIST. AI risk management framework, an update scheduled for release on Thursday. As Mallory notes, Lucas and Comer pointed to a lack of outside input from industry in creating the potentially conflicting directive — naturally, the very voices of industry protested when the blueprint was first released. –Derek Robertson

Another teacher is experimenting with ChatGPT in the classroom, What he says are encouraging results.

Thomas Reed, a global expert on cyber warfare and professor at Johns Hopkins University, published a post Yesterday’s blog post Experimenting with the technology during a five-day course on malware analysis, he took it from lecturer Juan Andrés Guerrero-SA.

“This thing is going to change higher education,” Reed writes. But how and why? He points to a series of key factors that have all flowed into one another, in one form or another: filtering out “ordinary questions,” as one student puts it, that can be easily answered without disrupting the flow of the class, allowing many students of different levels of knowledge to move forward Cycle through at the same pace.

Much like Wharton professor Ethan Mullick wrote last weekTechnology is not seen as a threat to classroom learning and teaching, but as a complement and even an enhancement. “Yes, some unambitious students will use this new tool to cover up subpar performance, and yes, we can talk about how to detect or discourage such behavior,” Reed wrote. “The most inspiring conversation is a different conversation… How can we use machines that learn and help learn to push the edge of human knowledge through evolving research faster and in new ways? Saturday night felt like we had a new superpower.” –Derek Robertson