14 Aug PayPal introduces own “cryptocurrency” through “money” from private institutions – danger for democracy? (Comment)
– A commentary by Manfred Wolff –
The payment service provider Paypal has introduced a stablecoin in US dollars. This was announced by the US company on 08.08.23. Paypal is the first major financial technology company to use its own digital “currency,” which is actually “assets” because of the lack of a requirement to accept them as legal tender, for payments and transfers. Stablecoins are crypto assets whose monetary value is linked to a stable asset, in this case as the US dollar. Suitable ETFs can be used for this purpose, for example. Since 2021, Paypal has already enabled users in the U.S. to make payments with cryptoassets. Its own stablecoin is now called “Paypal USD” and is backed by U.S. dollar deposits and short-term U.S. government bonds, according to the consensus. This is a first step to pandering to the US regulators by elegantly prolonging the US debt problem by splitting the paper into broad distributions at a new level. The “PayPal USD” is issued by the “cryptocurrency company” Paxos Trust Company. Even if it sounds absurd at first: If this should succeed, it is a long-term threat to our liberal democratic basic order. Why? Well, the peg to the USD can be extended by a currency basket with EUR, RMB, YEN, SFR, etc. in succession and then at some point successively become completely independent, if the current transaction volume and the global acceptance, which Paypal can certainly achieve, are sufficiently built up for this.
We are putting ourselves in the hands of private investors when it comes to money creation and payment transactions. Their only objective is to maximize profits. Nor can they be blamed for this as an action inherent in the system, which is provided for in our economic and social order. But all the checks & balances are missing in the aftermath. All welfare state intervention mechanisms are lacking. No one dictates anything to these moneyed editors anymore. No one can hold them accountable. Any social order would have to submit to their dictates. The people will follow in the mass, also by data-efficient opinion preparation for their own advantage, here rather than well-meaning state preachers, who will stand with their moral Suasion sometime alone in the desert. Paypal could give away “money” for a birthday, for example, but only to each of its like-minded inner-premium circle. I do not share the idea of many politicians and central bankers that these digital cryptoassets can be closed or regulated away at any time with a wave of the hand from state sovereignty. Politicians are currently not implementing other necessary things for fear of votes. I see the danger of a ticking time bomb. The ECB has been slagging off the issue of a digital euro as an alternative for too long and is probably not implementing it as “cash in a different state of aggregation,” i.e., digitally in place of printed paper or pressed metal, but without anonymity within a digital circuit. Too bad. Conclusion: An economy that no longer has its monetary economy under elected political control loses its democratic legitimacy in the long term.