- Raoul Pal has said that CBDCs represent the biggest potential change to the global financial system since the Bretton Woods agreement
- The 1944 agreement formalized a reliance on a gold-backed U.S. dollar and lasted until 1971
- Pal says that CBDCs will give central banks the ability to “manage fiscal policy”
Real Vision founder and CEO Raoul Pal has claimed that the implementation of Central Bank Digital Currencies (CBDCs) will represent the biggest change to the financial system since the Bretton Woods agreement. His comments preceded a meeting of the International Monetary Fund (IMF) which has already drawn comparisons to the post-war agreement that shaped decades of monetary policy.
CBDCs to Present Biggest Financial Change in a Generation
Pal took to Twitter to embark on a lengthy thread that began by outlining the high level at which CBDCs are already being discussed, saying that imminent arrival of CBDCs will represent the “biggest overhaul of the global financial system since Bretton Woods”.
The Bretton Woods system was a financial governance system designed in July 1944 as the countries of the world worked to rebuild the global economy after World War II. The 44 allied nations came together to agree a system that, among other things, would see fixed exchange rates based on a U.S. dollar backed by gold.
This system ran for almost 30 years but was formally abandoned when the U.S. left the gold standard in 1971.
Central Banks Will Attain New Fiscal Powers
Pal continued by warning that CBDCs would allow central banks to “circumvent the banking and fiscal system and give or take money (tax or transfer payments) directly”, which would allow central banks to “manage fiscal policy, outside of governments balance sheets.”
A move away from the dollar towards a “basket of currencies” is only 3-5 years away he adds, and even goes so far as to suggest that the Inland Revenue Service could be abolished if a digital dollar were to be mandated in the U.S because the Federal Reserve could do its job.
Pal adds his weight to claims that the existing currency system is rapidly becoming outdated, and that developments like China’s digital yuan show that CBDCs are not just imminent, they are already here.
Pal’s comments came the day before a meeting of the IMF, which Managing Director Kristalina Georgieva has already likened to “a new Bretton Woods “moment””, comparing the financial impact of the coronavirus to that of World War II.
