2018: G7 Central Bank to start buying cryptocurrencies

nRunaway Comment: Encrypted currency has now become one of the central issues of central banks in all countries. This emerging market is clearly witnessing rapid growth in 2017. By the time of 2018, Eugene Etsebeth, a former South African central bank employee, wrote this article. Starting from the perspective of how G7 central banks will treat cryptocurrencies, the future prospects of cryptocurrency markets Predicted to help people who are concerned about the development of Bitcoin learn more about the market.n
nTranslation: Inan
The Central Bank of the G7 has been less active in buying and selling the same foreign currency, securities, SDRs and gold.n
Central bank traders follow an investment policy that the executive board has set for specific asset allocation objectives. From an important point of view, the objectives of foreign exchange reserve transactions are generally in the order of liquidity, safety and return.n
At present, the G-7 is only concerned with the “proper regulation” of cryptocurrencies and has not considered the potential of cryptocurrencies in assets. Bitcoin, Ether and zcash are not yet on the list of eligible instruments and currencies that central banks are allowed to trade.n
By 2018, the situation will be different. G7 central bank will start buying cryptocurrencies to strengthen foreign exchange reserves.n
Times are changing.n
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Backgroundn
One of the central functions of the central bank is the management of the gold and foreign exchange reserves that its state holds in its possession.n
Reserves are necessary to ensure that a country can repay foreign exchange indebtedness and maintain its confidence in monetary and exchange rate policies. In general, the financial stability brought about by gold and foreign exchange reserves has traditionally been the protection of citizens’ economic wealth under external shocks.n
Gold is usually held to prevent “Black Swan” economic events. Its high liquidity, currency attributes and diversified advantages make it a buffer against economic disasters.n
Foreign exchange also has the advantage of high liquidity and diversification (compared with the central bank’s own currency). Foreign exchange is mainly bought through the spot market, through foreign exchange currency market swaps to invest and domestic liquidity management.n
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Internetn
The G7 countries are linked to each other through political, financial and trade agreements.n
This national alliance has huge foreign exchange reserves in member countries. Most of these countries also have a large amount of gold reserves. One of the exceptions is Canada, which has sold off its own gold reserves.n
G7 central banks also typically hold SDRs and foreign currency securities such as government bonds, corporate bonds, treasury bills, corporate stocks and foreign currency loans.n
It is important to note that the SDR is an international reserve asset created by the International Monetary Fund to supplement the official reserves of its member states.n
The value of an SDR is based on five major currencies, namely the U.S. dollar, the euro, the Chinese yuan, the Japanese yen and the British pound. The renminbi became the fifth currency in the SDR basket on October 1, 2016.n
It is noteworthy that the SDR is still important for the G7 currency.n
In short, most G7 member countries use each other’s currency as a reserve for foreign exchange, either through SDR or in a direct manner. Gold is basically regarded as a common standard of universal value.n
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Why 2018 will change?n
The G7 will see a turning point when the market value of Bitcoin exceeds the value of all SDRs that have been created and assigned to members (about US $ 291 billion).n
Another turning point will be people’s realization that G7 currencies are depreciating in comparison to cryptocurrencies. SDR and G7 currencies will be forced to change the weight of their foreign exchange reserves and eventually into a basket of cryptocurrencies.n
Christine Lagarde, president of the International Monetary Fund, has warned of massive subversion by the central bank in the cryptocurrency.n
Foreign exchange reserves are used to support a country’s currency. A legal currency is paper or a coin that has no value in itself, and its only value is that it is supported by the common belief of the participants in the national currency scheme. For example, when the Bank of Japan bought foreign currency reserves, the Japanese people began to support the common belief of the U.S. dollar.n
In 2018, the G7 central bank will see bitcoin and other cryptocurrencies as the largest international currency in market capitalization. And, the fact that cryptocurrencies have the global character of conducting 24×7 transactions makes all of this naturalization of cryptocurrencies a real investment as part of the central bank.n
Encrypted currency will also serve as new demand for digital gold.n
In addition, foreign exchange reserves have also been used to promote international trade. This means that holding a reserve in the trading partner’s currency will make the transaction easier. In 2018, cryptocurrencies such as bitcoin will also be used for international trade as their high return as an investment will encourage G7 countries to adopt a “hold” strategy.n
Foreign exchange reserves are also used as monetary policy instruments. These central banks may control the exchange rate by buying and selling foreign currencies. In 2018, central banks in all countries will begin to realize that it is not feasible to formulate monetary policy for the global currency encryption market.n
Foreign exchange reserves can be used to hedge their own economies. For countries that depend on exports for economic development, foreign currency can be used as a buffer if the value of exports or currencies declines.n
The G7 central bank will buy cryptocurrency as a hedge against its economic performance.n
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Change how it happensn
The systemic weakness of the French currency is becoming clear compared to the rapid growth of cryptocurrencies, and the executive boards of these central banks, including the president, president and chairman, will hold an emergency meeting to exercise their privileges to change the current investment management policy on reserves.n
Bitcoin and other selected cryptocurrencies are added to eligible securities and currency lists. Central Bank funds enter the cryptocurrency market.n
The G7 may invest in cryptocurrencies in this new millennium through external fund managers. But do not expect them to release the information generously.n
All this will happen in the dark, because old habits are hard to change.n

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