Central Bank Update February 2021 - Fed Watch 41 - Bitcoin Magazine Podcast

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In this episode of Bitcoin Magazine’s "Fed Watch" podcast, Christian Keroles and Ansel Lindner gave an update on central bank news in relation to bitcoin. This is the only podcast that tackles this intersection of macro and bitcoin from a realistic and skeptical point of view. The cracks in the legacy financial system are fairly evident at this point, but it is not going to be a quick and easy transition to what is next. Bitcoin’s niche is growing and muscling into the territory of the legacy system. But it will happen in phases, without a centralized plan. This podcast examines that point friction.

This episode started with a review of Federal Reserve Chairman Jerome Powell’s comments over the last week. The hosts dove into its dual mandate of stable prices and maximum employment, and the Fed’s focus is switching to employment. Powell also implied a slight change to its policy on inflation “running hot” over 2 percent in an attempt to target an average of 2 percent inflation. He said that stimulus results in temporary shocks of inflation, and it is those temporary shocks over 2 percent that is is willing to allow.

Next, the hosts moved onto the European Central Bank (ECB), which has been the center of a majority of central bank news over the last six months. Lindner read through some comments by Fabio Panetta, member of the ECB’s executive board and chair of the task force on a digital euro, from last week. He was very negative on corporate stablecoins while dismissing bitcoin completely. Then, out of the other side of his mouth, he proclaimed the progress they are making on the digital euro. 

However, Panetta lastly spoke about tradeoffs in the design of the digital euro, between functionality and privacy. This is interesting because accepting there are tradeoffs is something that comes after a learning process for Bitcoiners and still evades many people involved with altcoins. Bankers at the ECB seem to be progressing along the typical learning curve of others as they enter this space, and are ahead of most altcoin folks already. It is only a matter of time until they come around to the fact they cannot compete head-to-head with bitcoin.

The hosts finished up the central bank news by talking quickly about the People’s Bank of China (PBoC) and the Bank of Japan (BOJ). Here, the only news is a lack of news from China around Lunar New Year and the BOJ announcing a review of their policies starting in March as its economy looks to be heating up slightly.

In typical "Fed Watch" fashion, the hosts spent the last few minutes talking about bitcoin and some of the broad developments over the last month. All together, another great episode.

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–Ansel Lindner: Economist, author and bitcoin specialist. Find more from Ansel at the Bitcoin & Markets podcast (bitcoinandmarkets.com), the BitcoinDictionary.cc and new macro blog Bitcoin & Markets Research (BTCM.co).

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