2022-02-17

Will WeChat Become an Alternative Payment System for the West?

A money should function as a store of value and a medium of exchange. Credit money is ultimately backed by the financial system behind it. When the banking system begins destroying the credit, it destroys the currency.

Global News: Canada’s banking industry will carry out emergency orders to stop trucker convoy (Archive)

Canada’s banking industry says it will follow through with the federal government’s emergency orders targeting the trucker protesters as discussions on how best to implement them continue.

The government published details late Tuesday on the requirements covering a wide range of the financial industry including banks, credit unions, insurance companies, portfolio managers and investment counselling services.

The Canadian Bankers Association said in a statement Wednesday that, as with other financial service providers, banks will “need to diligently implement the required measures.”

...The emergency orders direct financial institutions to suspend services to both individual and business clients who they suspect are aiding the blockades.

...Banks have been given protection from civil liabilities for actions done in following the orders.

Cryptocurrency platforms are also covered by the order and some, including Toronto-based BitBuy, say they’ve already received guidance on cryptocurrency addresses from law enforcement.

Finbold: Five major Canadian banks mysteriously go offline in hours-long outage (Archive)
On February 16, five major Canadian banks went offline, preventing a number of customers from using e-Transfers, online banking, and mobile banking services.

The financial institutions affected by the outage included the Royal Bank of Canada (RBC), BMO (Bank of Montreal), Scotiabank, TD Bank Canada, and the Canadian Imperial Bank of Commerce (CIBC).

The number of complaints of people experiencing difficulty accessing their online banking peaked between 5 p.m. and 6 p.m. Eastern time on Wednesday, February 16, while accounts of this issue are still occurring on Thursday, February 17, according to a report by BleepingComputer.

At this point, there is no safe money in the world. Every one of them is intrinsically flawed. For store of value, gold. The point here is not making money, but retaining value. Silver is more volatile than gold, making it good speculation, but a bad savings vehicle if your holding period is less than a full bull-bear cycle. BTC and other cryptocurrencies are ultimate speculative vehicles right now, not for savings.

The best money for transactions is cash. That's why there is a war on cash: you can avoid the banking system and its attendant censorship with physical fiat. The government cannot "block" physical cash transactions and if it tried, the value of all its currency, including electronic, would plummet. Operating entirely in cash has risks such as physical security.

An alternative is a foreign payment system such as Alipay in China or WeChat. Bloomberg: Why China’s Payment Apps Give U.S. Bankers Nightmares

Alibaba Group Holding Ltd. created Alipay in 2004 to let millions of potential customers who lacked credit and debit cards shop on its vast online marketplace. Tencent Holdings Ltd., similarly, debuted its payments function in 2005 in a bid to keep users inside its messaging system longer.

Alipay and WeChat have since swelled in popularity, boasting 520 million and 1 billion monthly active users, respectively. Consumers sent more than $2.9 trillion inside the two systems in 2016, equivalent to about half of all consumer goods sold in China, according to the payments consultancy Aite Group.

It makes sense to get Alipay or WeChat as a backup. Yes, China also enforces political and social credit blockades, but are you planning on running afoul of the Chinese government? If not, they aren't going to notice or care. Although I think the yuan is also in trouble in terms of devaluation risk, using physical yuan outside of China (or any nation that can stand up to the U.S.) has merit. Many people use U.S. dollars because it is the reserve currency, but it maintained that status in part because of the nation's open banking system and just law.

Perhaps a new monetary standard will emerge from this chaos. There is opportunity for one now that the Canadian government has fired the first totalitarian shot in the West. While I never believed they would be proven wrong, predictions of totalitarian financial repression were still mostly predictions. Not anymore. All banking systems are now suspect. Operating inside the banking system is now high risk for anyone because the regime is mentally unstable. T he current situation is akin to the Cultural Revolution in China. Even people who are favored by the regime today could become its targets tomorrow. 

The exit from the banking system will progress slowly, but it will accelerate destruction of the financial system. The next crisis could be a killshot for banks, either because the govt implements totalitarian control (with or without overt nationalization of assets) or the public retaliates by letting the banks collapse. The damage Trudeau inflicted on the banking system will hurt the government's repression campaign, which in turn accelerates the push for central bank digital currencies. These effects are going to spillover quickly. Everyone who pays attention knows "American" BigTech is already handmaiden for the authoritarian left. The time for a Parallel Economy is now. The Great Separation had begun.

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