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Macroeconomic Analysis And Trading Ideas

Trading this week's fundamental events The market's attention will be fixed on the Federal Reserve's final policy meeting of 2023 scheduled for this Wednesday, with the expectation that the US will maintain interest rates at a 22-year high. Investors will have an opportunity to scrutinize the Fed's statement and Chair Jerome Powell's press conference for any indications of potential rate cuts in 2024 (or lack thereof). One day prior to the Feds decision, the US is also poised to unveil essential inflation data. Forecasts suggest a marginal uptick of 0.1% in November consumer prices. Turning attention to Europe, traders will focus on rate decisions from the European Central Bank (ECB) and the Bank of England (BoE), both occurring on Thursday. The BoE is predicted to maintain borrowing costs at a 15-year high while reiterating the necessity for elevated rates. Any commentary from the bank deviating from this outlook could potentially cause ripples in the market. Eurozone inflation dropped to 2.4% last month, down from over 10% a year earlier, following ten consecutive rate hikes. This decline brings the ECB's 2% inflation target into view and makes a further rate increase unlikely. Goldman Sachs has forecasted that the European Central Bank's meeting in April will mark the initiation of its first rate cut, followed by a 25 basis points cut at each subsequent meeting throughout the year.
by BlackBull_Markets
The Influence of Central Banks on Forex TradingThe global foreign exchange (Forex) market constitutes a vast and intricate financial ecosystem in which currencies from across the globe are traded. This marketplace witnesses the exchange of trillions of dollars on a daily basis, rendering it among the most liquid and dynamic markets on earth. Amidst this bustling activity, central banks play a pivotal role, especially through their institutional obligation to determine and conduct the country’s monetary policy. In this article, we will delve into the crucial influence that these major players exert on currency pairs and explore the role of central banks in the forex market. Central Banks and Their Roles Central banks are the main financial institutions in a country and serve as custodians of the domestic currency. They steer economic activity mainly through the money supply, which is influenced by setting a reference rate for domestic banks to borrow and lend money. Thus, by targeting specified central bank interest rates, a central bank sets exchange rates through the market forces of demand and supply. Anticipated hikes or cuts in interest rates are conveyed throughout all financial markets well in advance of official announcements, influencing the decision-making of traders and investors. Impact of Central Bank Foreign Exchange Measures on Forex Trading Central banks have numerous instruments to manage the foreign exchange rates of their domestic currencies, including different rate regimes, central bank foreign exchange interventions, and interest rates. Exchange Rate Regimes and Their Effects Two major regimes determine the framework within which central banks operate and influence the broader financial landscape. Fixed exchange rate regimes involve pegging the local currency to a specific measure of value, often a major international currency like the US dollar. The stability of this kind of central bank exchange rate can be attractive; however, it limits the ability to independently manage the interest rate in the central bank policy. Here, interventions are typically geared towards maintaining the established peg. Conversely, floating exchange rate regimes provide the flexibility to determine the interest rates, as well as use all other vital tools for achieving monetary policy objectives. Central Bank Foreign Exchange Interventions Currency interventions are a common strategic tool in central bank foreign exchange policies, and they can cause notable fluctuations in forex. A direct intervention occurs through the direct buying or selling of the local currency. This action is often used to stabilise or manipulate the exchange rate in the desired direction. Buying increases demand, and the forex rate of the currency appreciates. Selling does the opposite. An indirect intervention involves adjusting target interest rates to influence investors' perceptions and behaviour. This involves actual raising or lowering; however, it can also include giving out subtle signals and implications through public statements made by officials. Central Bank Interest Rates and Their Influence Decisions regarding targeted central bank interest rates are at the heart of monetary policy. Depending on the general economic stance, the monetary authority has the option to raise rates (or keep them high) or lower them (or keep them low). Hawkish Monetary Policy Hawkish monetary policy refers to a stance that favours higher interest rates. This approach is also known as contractionary monetary policy, and it is adopted when the central bank seeks to combat high inflation or cool down an overheated economy. Hawkish policies are conducted by raising central bank interest rates, leading to an increase in capital inflows due to the expectation of better returns. The demand for the local currency rises, leading to its appreciation relative to foreign currencies, which is also reflected in the central bank forex rates. Dovish Monetary Policy Conversely, a dovish monetary policy involves favouring lower interest rates to stimulate economic growth by encouraging investments into the real economy. Lower rates can make borrowing cheaper and encourage spending and investment in the real economy. That may potentially weaken the demand for the domestic currency as it becomes less attractive to investors seeking higher returns, causing depreciation in the exchange rate. Central Bank Interest Rate Instruments The primary objectives of central banks are to maintain low and stable inflation, promote economic growth, and improve the purchasing power of the domestic currency, which in turn should provide for a healthy labour market and encourage strong consumption. Several instruments are available for that purpose. Open market operations (OMO) are the main tools for achieving the targeted interest rates. The impact on forex rates follows these decisions and actions. OMO refers to the buying or selling of securities (typically government bonds) in the open market. Buying injects money into the system, indirectly lowering banks’ interest rates, while selling acts in the opposite action. Another instrument that explains the role of a central bank in the forex market is the discount rate at which commercial financial institutions can borrow money from the central financial authority. Adjusting it adds/removes liquidity from money markets. The reserve requirements are another available instrument. Modifying the percentage of total liquid assets to be held by financial institutions as reserves can either enhance or diminish domestic currency liquidity and affect interest rates. In their pursuit of specific objectives, central banks wield a direct influence over forex trading. Fluctuations in central bank interest rates significantly impact currency values, can cause severe volatility, and create lucrative arbitrage opportunities for forex traders. Interest Rate Differentials: Opportunities for Traders Interest rate differentials are observed when there are gaps between the central banks’ interest rates. A higher interest rate in one country can lead to an influx of foreign capital, strengthening its currency. Respectively, when one country raises its rates while another keeps them lower, it creates a differential that attracts capital towards the higher-yielding currency, causing its appreciation and also a higher forex rate. If you are interested in exploring trading opportunities, you can head over to FXOpen and try out the TickTrader trading platform. Central Bank and Foreign Exchange Related Events Traders use economic calendars to plan their strategies and stay ahead of potential opportunities or risks. Important announcements include employment reports, GDP releases, inflation figures, and consumption numbers. Yet, among the most closely followed events by traders are central bank interest rate decisions, as they have a profound impact on currency exchange rates and financial markets. The timing and frequency of these announcements are known well in advance. For instance, in the US, the Federal Reserve holds eight scheduled meetings throughout the year, the European Central Bank conducts meetings every six weeks, while the Bank of Japan and the Bank of England typically hold meetings on a monthly basis. Several weeks after they announce the target rates themselves, many central banks release the so-called “Minutes” – a detailed record of their latest monetary policy meeting. The “Minutes” can be of crucial importance as they offer a deeper insight into the discussions and deliberations among the officials and may provide insights into their future intentions and assessment of the economic outlook. Trading Behaviour Around Major Interest Rate Releases Trading before and after major interest rate announcements is challenging. Before a major announcement, traders consider the forecasts based on previously released economic data. If the expected rate estimate is in favour of a rate hike, appreciation of the respective currency is likely, and traders will buy it; otherwise, if data speaks for a rate cut, currency depreciation can be expected, and traders will sell. Traders typically avoid holding open positions during an announcement. This way, the risk is mitigated, as, during an announcement, rapid, unpredictable movements of currency pairs can occur, especially if the actual announced rate differs from market expectations. After the announcement, new positions can be opened. Conclusion Central banks are formidable players in the forex market, wielding significant influence through their monetary policy decisions and interventions. Traders and investors must closely monitor the authority’s actions and signals, as these can create substantial profit opportunities and risks in the dynamic world of forex trading. Curious about exploring the vivid world of forex trading? You can consider opening an FXOpen account that will grant you advanced trading opportunities. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
3
GREED, GREED, GREED but what follows?About a month back, I made a solid move in the market that sparked a strong rally. Now, as we near the end of a strong earnings season, I'm in a neutral position, but I'm taking steps to secure gains by trimming my positions. I reckon a decent pullback would be beneficial before considering further upward movement. There's quite a few gaps to fill due to some impulsive buying, and I believe reallocating capital is crucial for a healthier market, especially considering how much weight big tech holds in the SPY. NVIDIA's earnings showed remarkable strength. They surpassed already optimistic expectations by a significant 10%. The $600 target set by premium sellers seemed overly ambitious, yet those sellers managed to benefit from the earnings report released last week. Many institutional investors are operating under the assumption of a smooth landing in 2024, envisioning reduced rates, a depreciating US Dollar, a weakened Chinese macroeconomy, and sustained dominance in Large Cap Tech. The consensus among fund managers leans towards the belief that the Fed's rate hike cycle is nearing its end, with expectations of forthcoming decreases in short-term rates. Additionally, there's a noticeable shift of interest towards Real Estate Investment Trusts (REITs) and Japanese stocks. (Source: BofA Global Fund Manager Survey, BLOOMBERG)
AMEX:SPY
by SPADESASSETS
2023The chart you see is the EURUSD but this post isn't just about euro but it will be a key player coming into next yr. It's been a year of CB's but where do we head next? BOE raising rates 3.5%, with the split vote as we head into 2023 expect a large recession going forward as all CB's have raised rates they are hiking a little bit too much and yes they will have to cut as we head into the recession but hiking could actually be a mistake but we obviously don't control what CB's will do and CPI is declining 11.1% it dropped to 10.7% cost of petrol, tobacco etc Food prices are rising. It is a great amount 10% core inflation isn't excelling it's still at those areas. Raising rates, it takes time to come into transition. Now don't forget we've got strikes such as rail strikes, it isn't busy with retail sales aren't excelling people can't get into these stores and less people are spending. FOMC: Raising rates 0.25% keep rates higher 2023 5.1% expectation of rate. Very hawkish, headline inflation 7.1% lowering CPI. These rate hikes are working. The market rallied S&P, it declined. Rate hikes are pacing themselves, we could even get cuts mid next year stop hiking rates, recession. It will take more evidence for inflation is on downward path, in reality it is declining. Perhaps its due to core inflation. The dot plot was the main move. It's 4.5%, they want 5.1%. No cuts in 2023, that's the questionable bit as well. Now market did rally before thinking there would be cut sooner 2023 well the dot plot differs in that view. 17 out 19 for 5.1% members. Last 3 months it has raised. That's interesting. Labour market jobs available and working 3.5 million it is very tight. When going into recession there's cost cutting, further reduction of employees = Recession. Job cuts are here tech sector, finance sector etc. Wages stay high, no demand disruption. May sustain high inflation. The need keeping rates higher for longer, extending the demand disruptions. Hiring was very difficult in first place, are workers going to extend the cut of workers? Time will tell. ECB hiked as all CB's are. Anybody who thinks this is a pivot, is wrong. 50 basis point hikes pace for period of time EU indices fell. Very hawkish. They are lagging compared to other CB's, current rate 2.5%. Now bare in mind they do have to think of other countries but they are behind compared to others, the large bear move came. Quantitative tightening in May extends. We had CPI's, we've had of this year CB's. Year ends all CB's hawkish. The markets SPX and other EUR indices rallying but it hasn't happened the Grinch came out, you can see in my previous posts I wasn't confident at all we could head higher especially SPX this can be seen through previous posts. I expect this to continue. Don't forget you got China think about as well reopening, it's interesting time there. Overall regarding the market, we already see housing having issues, there's another country that has my key interest it's Mexico, will manufacturing move further away from China and head a little to Mexico? USDMXN interesting FX pair I am going to keep an eye on for next year. Regarding market overall, I am bearish DXY for the next 6 months in my humble opinion . I feel shorter term, for sure a pull back but I think longer term: GBP we could hit back to 1.30/1.35 areas, EUR 1.15/1.20, XAG 30-35, keep an eye on other euro minor pairs could extend further a lot more in gains than others and yes I will even mention crypto 8-10k Bitcoin seems a good support area! If we technically stay above those areas, could be a good time to buy but that market overall has a lot of reinforcement to make regarding the regulations. The market doesn't go in straight line that's where technicals come in. Last year I expected we get higher DXY - we achieved that but this time I'm on the flip side...embrace yourself for recession. Happy Holidays & Get ready to smash 2023. Trade Journal Financial Trader | Empowering Your Trading Journey Disclaimer: Not Investment Advice Or Signal Provider
by Trade_Journal
3
Bitcoin(BTC/USD) Daily Chart Analysis For Week of Nov 17, 2023Technical Analysis and Outlook: Currently, the price of Bitcoin has been contained within our completed Inner Coin Rally of 37800 and vital Mean Sup of 35600. This has resulted in a trading tunnel that is particularly beneficial for those experienced in active trading. However, it is worth noting that the price is currently dropping towards the Mean Sup of 35600, and there could be a possibility of a further correction to the Mean Sup of 33900. On the upside side, Bitcoin's price has the potential to reach the Next #1 Outer Coin Rally of 39200, #2 41200, and #3 43700. This indicates a prospect for upward momentum in the near future. Observing these price-action developments closely is crucial, as they could allow investors/traders to profit from the market. Understanding these price fluctuations and knowing when to act can be extremely beneficial in maximizing returns.
BITSTAMP:BTCUSD
by TradeSelecter
Bitcoin(BTC/USD) Daily Chart Analysis For Week of Nov 10, 2023Technical Analysis and Outlook: The latest update on Cryptocurrency indicates that it has completed the Inner Coin Rally 37800 and is currently in the correction phase. The correction is expected to take it down to the intermediate target of Mean Sup 35600, but there is also a possibility of the correction extending further to Mean Sup 33900. On the upside, there are two crucial levels that investors/traders should keep a close eye on. These are the Outer Coin Rally 39200 and the Outer Coin Rally 41200. These levels are significant as they can influence the future trend of Cryptocurrency.
BITSTAMP:BTCUSD
by TradeSelecter
AUDNZD: Awaiting the RBA's decisionThe Australian dollar might give back most of its recent gains against the U.S. if the Reserve Bank of Australia opts not to raise rates next week, given the groundswell of opinion backing a hike. Thirty-five out of 39 economists polled by Reuters expect the RBA to increase rates on Nov. 7, with only four predicting a hold. All of the “Big Four” Australian banks are in the majority forecasting a hike, including Westpac where newly-installed chief economist Luci Ellis was until recently assistant governor at the RBA. AUD/USD scaled a five-week peak of 0.6456 on Thursday, as the risk-sensitive AUD benefitted from global equity gains, hours after AUD/NZD notched a 19-week high of 1.0948. If the RBA springs a dovish surprise and keeps rates unchanged on Tuesday, AUD/NZD pair could sag towards 1.0820 area. Australia’s central bank most recently raised rates in May (when 75% of economists polled by Reuters expected a hold). With these in mind, we will follow a simple bearish setup and try to take a short position on a potential technical bounce with a stop loss above the previous top. Trade with care Like | Share | Comment
Short
by TheAnonymousBanker
5
XRP Price PredictionLooking at XRP's overall Price Action since its listing at Bitstamp in 2013 we can see a similar pattern evolving in the current Cycle compared to the Cycle from 2013-2017. 2013-2017 Price Action: 1. Cycle: Quick run up, then it went down like a curve relatively quickly (see blue line) 2. Cycle: Lower High than last Cycle and bottoming out over a longer period of time 3. Cycle: Parabolic Run Up Between Cycle 1 & 2 it took out Sellside Liquidity. Between Cycle 2 & 3 it took out Buyside Liquidity resting at 0.00907 - the swing high of that move comes in at 0.00947 ______ 2017-current Price Action: 1. Cycle: Quick run up, then it went down like a curve relatively quickly (see blue line) 2. Cycle: Lower High than last Cycle and bottoming out over a longer period of time 3. Cycle: Parabolic Run Up? Between Cycle 1 & 2 it took out Sellside Liquidity. Between Cycle 2 & 3 it took out Buyside Liquidity resting at 0.917 - the swing high of that move comes in at 0.947 Look at the "coincidental" price points of both Cycle's Buyside Liquidity grabs...you can't make that up. Remove two zeros and you almost get the exact same price points as in July 2023. ______ My guess is that it will take out the Sellside Liquidity resting at $0.28704. Maybe even trading down to grab the Sellside Liq. at $0.16918. Once it grabbed it, it will then go for another parabolic run up like we saw in 2017. Why would that make sense with the overall understanding of the market? Like I explained in my last BNB analysis Tether will go down at one point. Inevitable. XRP won't stay up there during that moment in time. Also think about it like this: The SEC case pump in July was a trap for retail traders to buy it up. Who sold it to them? Smart Money (the big guys). If Smart Money sold their fair share of XRP in July, then they definitely want to buy back in again, but at much lower prices, right? Who is going to sell once we break down the $0.30 floor? Retail...Smart Money is buying it all up, then we wait & XRP will be one of the big players in the future and get another parabolic run - working with Central Banks etc. (if you want to learn more about that follow me here or on Twitter - I will post more in the near future) ______ Looking at the chart from a different perspective: Since 2017 the chart has been getting compressed. When something gets compressed over a long period of time, this pressure needs to be released at one point like we saw in 2017. The same will happen in the future. Or think about it like as if it was breathing in and out. Universal laws. ______ Welcome to kingoftrades 88's way of charting. ______ Nothing posted here is financial advice.
BITSTAMP:XRPUSD
by kingoftrades88
17
Why we’re watching the Bond/Equity Volatility With the action-packed week of global central bank meetings for September now behind us, we believe it's an appropriate time to review where we stand. The current phase, in our view, can be aptly summarized by the words of Huw Pill, the Bank of England’s Chief Economist: a ‘Table Mountain’ scenario rather than a ‘Matterhorn.’ Recent announcements have positioned the Swiss National Bank, the Bank of England, and the Federal Reserve as adopting a pause stance. Meanwhile, the ECB suggests that it is in the final stages of its hiking program, and Sweden’s Riksbank has just executed its final hike. While we remain slightly skeptical that these hikes may indeed be the final ones, let's entertain this thought and examine what transpires during periods of a defined pause. Defined pause periods raise alerts for us, as highlighted in our previous piece on US Equities. In that article, we pointed out the impact of a Fed pause, as it has often preceded periods of equity drawdowns. This pattern becomes even more evident when we consider other variables like shifts in the dollar and interest rates. Looking at the S&P 500 index —in 2000 and 2006—where a clear pause was observed, significant equity drawdowns followed thereafter. Furthermore, the 10-Year, 2-Year, and 3-Month yields have just reached their highest levels since October 2007, June 2007, and January 2001, respectively. These yields mark the highest nominal interest rates seen in decades across the interest rate curve. More significantly, this shift has brought real yields back to positive levels, something investors haven't seen for a while, all while the yield curve inverts to unprecedented levels. All of these factors have spill-over effects on investors accustomed to decades of low real interest rates. Another observation worth noting is that the ratio of Bond to Equity volatility has proven to be a reliable indicator for predicting the next market regime. For instance, during the 2008 period, a break in this ratio was followed by significant moves lower in the market. A similar phenomenon was observed in 2019, where a sharp break in the ratio of MOVE to VIX preceded the market's next downturn. What captures our interest now is a recent, significant break in this ratio, reinforcing our bearish outlook on equities. In terms of daily charts, the recent gap down places the index at a precarious juncture as it grapples with both a sharp break of the 100-day moving average and trend support. Compared to the last two instances when the index broke lower, the current RSI stands at even lower levels. Adding to this, only 18% of S&P 500 stocks currently trade above their 50-day moving average. Given the breakdown in the MOVE/VIX ratio, the global pause in interest rate policy, and supporting technical indicators, we are inclined to maintain a bearish stance on US equities. We can express this view via a short position on the CME E-mini S&P 500 Futures at the current level of 4347, with the take profit at 3800 and stop at 4500. Each 0.25 point move in the E-MINI S&P500 index Futures is equal to $12.5. We can also express this same view with the CME Micro E-mini S&P 500 Index. With each 0.25 point move equating to $1.25, its smaller tick size compared to the standard contract offers greater flexibility in position-building or averaging your entries. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.cmegroup.com www.cmegroup.com
TVC:MOVEShort
by inspirante
2
LIQUIDITY MATTERS! Global liquidity vs #BitcoinLook at how the bullish green arrows and bearish red arrows show how global liquidity correlates HEAVILY with the direction of Bitcoin. T You don't have to be a genius to see how beautiful this correlation is. And how sensitive #BTC is to excess capital in the system. As a risk on asset When ppl have easy money to gamble with , a portion of that ends up in the #Crypto markets. Currently you can see how aggressive the withdrawal of liquidity is across the globe In the USA, EU, China & Japan.
FRED:WALCL
by BallaJi
Central-Bank-Digital-CurrenciesHello, Welcome to this analysis about Central-Bank-Digital-Currencies in which I will explore the ongoing process by central banks to generate Digital-Currencies that replicate the individual Fiat-Currency, its characteristics, its possible manifestations, and its differences to the classical cryptocurrencies we all know as Bitcoin or Ethereum created in the beginning. Since Cryptocurrency was invented by the esteemed Satoshi Nakamoto publishing the open-source white-paper about Bitcoin as a completely decentralized Peer-To-Peer Digital-Currency which supply is limited and is generated through mining and the Proof-Of-Work concept many other decentralized cryptocurrencies emerged such as Ethereum or Litecoin that approved a secure and stable way of payment solutions operating within the determined blockchains. This completely new form of currency and the digital interface was watched by critics as well as supporters and a hype created with cryptocurrency enthusiasts accelerating the innovation process in cryptocurrency. On the other side, banks and governments watched the Cryptocurrency development not always with a non-critical eye, and especially in this process central banks took a greater study into the technology and the idea came into the foreground for digital currencies held and issued by the central banks that should replicate the real fiat-money which is printed by the central banks and distributed through commercial banks. The digital currencies that should be issued by the central banks became the name CBDC (Central-Bank-Digital-Currency) and today many countries' central banks started to work on pilot projects and prototypes to launch the digital replicate of fiat money, in some countries they are already launched and implemented in the economy. __ - Comparing The Classical Concept Of Cryptocurrency To The Central Bank Concept Of Digital-Currency The main characteristics of the classical cryptocurrency like invented in 2009 are that it is decentralized and that its supply is limited while the bitcoins are generated through the mining process there can be no more than 21 Million Bitcoins at all that defines the value of Bitcoin as miners need to improve the technological alignments to rightly mine the Bitcoins and come up with a mining-revenue to keep the process ongoing. On the other side, there is fiat money which is printed in the central bank printing press and which supply can be multiplied by will especially in times of crisis as it was in the last year the money supply increased exponentially by the central banks, this has an inflationary character and comes up with many other issues as in times of crisis the central banks need to print always more and more money as before. Now the fiat money printed by the central banks is issued to commercial banks with zero interests at this time and from there is supplied to the merchants and persons who taking up credits and which account money is held in a bank account as a "digital back-up" by the printed fiat money, the tendency with this bank account money is also to be multiplied by the banks and moved around in the system to be taken for credits so that one holds money in an account while it is used for the other individual's credit. Now as the central banks working on the digital currencies to substitute the fiat money in circulation the biggest difference is that its supply is not limited like it is in Bitcoin or many other cryptocurrencies, as the central bank fiat money can be printed further this is also the case with the upcoming central-bank-digital-currencies. Besides that the central-bank-digital-currencies are not decentral because they are issued by a central authority like the central bank, the system on which the CBDC is settled can be decentral however on a broader scale it is still centralized by the individual central bank, there is still a difference if the CBDC model is indirect, direct or hybrid nevertheless it is always centralized as the intern blockchain is created by the certain central bank. Another factor is also privacy as the public Bitcoin blockchain does not store any private user information, depending on the model with a CBDC this can be very different as there is indeed the possibility that private user information is stored in the blockchain by the central bank. Taking all these assumptions into consideration it comes to the conclusion that CBDCs aren't the same as the classical cryptocurrencies in common sense, it is rather a system that replaces the fiat money with digital money and gives the central bank much better opportunities to handle, store and track it with a faster network and potential storage of data. __ - Examining Models On How Central-Bank-Digital-Currencies Can Function With the gained assumptions it is important to note that there are different type models under which CBDCs can operate. Every model has its own characteristics and handles money circulation in an altered cycle. Besides that, the different models can have very different effects on the economy and especially on sectors like the banking industry or payment solution providers. Furthermore, the types on how payment data and information is stored differ within these models. It is highly necessary to recognize these concepts to assume how the CBDC infrastructure affects the economical landscape. The Indirect CBDC Model Within this model, the central bank keeps track records of wholesale accounts by the commercial bank as an intermediary between the central bank and the persons or merchants. The consumer as the person or merchant has a claim with the intermediary as the commercial bank and handles payments with the commercial bank. In this case, the intermediary handles all the communication with the consumer as retail clients and its net payment information, sending payment messages and storing the data. It would be a similar model to the actual credit distribution that exists with credits given by the central banks to commercial banks and from these distributed to the persons or merchants. The Direct CBDC Model The Direct CBDC Model functions differently from the Indirect one as the payments are handled directly between the central banks and the persons or merchants, in this case, receives, stores, and processes the information given by the consumer. This model is much more functional and practicable for the central bank as the commercial banks as intermediaries aren't necessary for the gateway. A full-scale implementation of this model will cause a higher decrease in commercial banks at all of which the sector already struggles, the model would further this process. The model would also set the central bank as the central authority handling all the payment relevant mechanisms with the consumer as persons or merchants. The Hybrid CBDC Model In this model the Persons or Merchants have a direct claim on the CBDC with the central bank while an intermediary, in this case, a PSP (Payment-Service-Provider) keeps track of the payments information and handles direct payments, the PSP in this case does not need to be a bank essentially. It is also integrated within that when technical issues come up with failures in the system that the central bank can handle direct payments with the consumers and restore retail balances. This system offers more flexibility at the cost of a more complex infrastructure to operate for the central bank. Besides that, it has a similar negative effect on the banks like the direct model as banks arent necessarily needed for the payment communication. __ It is not unlikely that the development of Central-Bank-Digital-Currencies will keep going within the upcoming times, therefore it is necessary to elevate how these diverging models can affect the actual economy. As many countries moving on with the projects and prosecution of CBDCs these will be realized in a more fulfilled way with a high possibility and it will be an important question on central banks will govern these CBDCs as they aren't decentralized like the cryptocurrency roots they can not be held as a direct comparison to these and are indeed a fiat money replication in digital terms, it will definitely open new doors for the central-banks money policy however what it has for effects on consumers as peoples or merchants is a serious examination. Thank you, for watching, it was important for me to scrutinize the significance of Central-Bank-Digital-Currencies and elevate a perception to this omnipresent topic. In this manner what do you have for an opinion of Central-Bank-Digital-Currencies implementation? Let us know in the comments below. Information provided is only educational and should not be used to take action in the markets.
COINBASE:BTCUSDEducation
by VincePrince
40
Expecting an intervention from the Central Bank of JapanLook at those beautiful channels for $FX:USDJPY. Last year, we had a strong uptrend from 115 to 151, and the central bank had to intervene strongly. We see another uptrend this year as well. There is a fight between the market and the central bank. BoJ had to make a move when the price reached to 144. But it seems market wants to push higher this. We potentially see another intervention around 148. Disclaimer – WhaleGambit. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
by WhaleGambit