Eugéne Etsebeth worked for the South African Reserve Bank from 2013 to 2017 but is not with it any longer. He recently explained why central banks won’t be able to survive cryptocurrencies in an article at Coindesk.
But Etsebeth may be wrong about reasons why cryptocurrencies won’t compete with central bank money and he may be wrong about central bank powerlessness.
Etsebeth has a list of 10 reasons why central banks are not going to be competitive. However, most of the list deals with central bank relationships, either internally or externally.
Yes, central banks have difficult or somnolent relationships with other banks or with the government. But the tenor of these relationships doesn’t matter. That’s because the bank relationships are mandated by law.
Even more importantly, central banks are empowered to set the value and volume of money. They set short-term interest rates and print as much money as is necessary, which is usually too much.
Central banks are a prime engine of monetary slumps and crashes. In various counties, including perhaps the US, people would get rid of central banks if they could. They cannot because the central bank is tied to elite banking control, and moving the stock or money up or down – and therefore the economy – is an ability that elites will not easily give up, if at all.
Central banks do not have power because they are good at what they do. No, central banks are actually positioned to make the monetary system fail at regular intervals. It is not coincidence when they do, though the causes may be variable.
The bottom line here is that central banks probably won’t fail just because they are big and clumsy. They will only fail if elites leading them give them up. They probably will not do so voluntarily.