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A digital euro is set to define the future of cross-border payments, gaining ground on the U.S. dollar as a reserve currency.
BY JOSUÉ MICHELS • NOVEMBER 3
The European Central Bank (ecb) plans to introduce a digital euro that could revolutionize the process of cross-border payments. This could change personal transactions and international trade. Former German Economics Minister Dr. Karl-Theodor zu Guttenberg is a strong proponent of the development and predicted in his 2019 thesis that the coming “revolution in banking and finance [will] almost dwarf the revolutions by the Medici [Italian banking family] centuries ago.”
Correspondent banking helps facilitate international trade, finance and other services for foreign and local banks and institutions. Many rely on United States banks and the dollar for these cross-border payments. And cross-border transactions still take days and often have high fees.
But correspondent banking could soon see its very own revolution. Guttenberg wants to drive this development forward in Europe. In his thesis, Guttenberg tackles the confusion in terminology in correspondent banking and traces its roots back to ancient Babylon; most others place its starting point in Renaissance Italy. Guttenberg writes in Chapter 4 of his thesis:
[W]e will try to widen the historical scope in international banking—a view that traditionally doesn’t reach much further back than to Renaissance Italy. However, as many see the cradle of banking, lending and deposit-taking systems already in ancient Mesopotamia, we will start our journey to the roots of correspondent arrangements in Babylon. Egyptian, Greek and Roman stimuli will be recognized, as well as advances made in the (early Islamic) Near East and in the context of the Crusades.
In his conclusion, Guttenberg explains why this historic view is so critical when it comes to revolutionizing the banking sector:
Long-distance payments will look different in the future. However, without the knowledge of their historical roots and present-day challenges, any new systems are at risk of failure and with them businesses, remittance efforts, and regulatory frameworks.
One triviality prevails: Knowing the history allows [us] to navigate the present and to prepare for the future.
In other words, Guttenberg believes that his thesis should be the basis of Europe’s digital banking revolution.
Many nations over the years have hoped that their currency would replace the U.S. dollar as the word’s reserve currency. One reason for this is the corruption in the U.S. banking system. Guttenberg starts his thesis with this quote from the Minority Staff of the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs of the United States Senate (2001):
U.S. banks, through the correspondent accounts they provide to foreign banks, have become conduits for dirty money flowing into the American financial system and have, as a result, facilitated illicit enterprises, including drug trafficking and financial fraud.
“These are harsh words from the U.S. Senate,” Guttenberg writes, “describing at the turn of the millennium the effects of a banking method that originated in its modern form in medieval Europe and that prevailed—in many aspects unchanged—until today: correspondent banking.” Guttenberg wants that system to be changed.
But freeing the world from U.S. corruption is not the only reason many seek alternatives to the U.S. dollar. If Europe is able to establish a system that facilitates cross-border payments faster and more efficiently than the U.S. dollar, the euro could soon be perceived as a more reliable reserve currency.
In response to the ecb’s report on a digital euro, the Financial Times asked on October 19: “Does a Digital Euro Challenge the Dollar’s Global Dominance?” The article noted that, with current cross-border payments, banks have to take some risks with every transaction. “The price of those risks is passed to the customer whether explicitly through fees, or implicitly through a delay,” they wrote.
Simplifying cross-border payments would encourage cross-border trade. The currency used to simplify the payment transactions would also be the currency the trade is conducted in.
A footnote in the ecb report reads: “As an example, currently most cross-border payments are ultimately cleared in U.S. dollars by U.S.-based correspondent banks. A multilateral cbdc [Central Bank Digital Currency] system, in which a cbdc is held only by residents of the respective currency area but is used for cross-border payments between participating central banks, could foster the international role of the euro.”
But as the Financial Times pointed out: “We are in the very early stages of the development of a central bank digital currency for the euro area. It’s not worth getting too excited just yet. It’s also worth remembering that the euro still lags behind the dollar in terms of its global use by some margin. The single currency makes up just over 20 percent of official reserves, compared with a little over 60 percent for the dollar.”
It is, however, worth noting that Europe works with great zeal to become an alternative to the U.S. dollar. It’s also important to note that China continues to rival the U.S. economy and is becoming increasingly hostile toward the U.S. If various Asian nations and European nations are looking for an alternative to the U.S. dollar that would also allow them to revolutionize their trading relationship, a digital currency may be the best solution.
The Bible specifically prophesies that this will happen.
Revelation 17 and 18 prophesy of a coming European empire of 10 nations. Herbert W. Armstrong wrote in the August 1959 Plain Truth that this coming conglomerate of nations “is merely the continuation of the ancient Babylonish system—a union of politics and religion and great economic cartels whose purpose is to rule the world! “
Is it a coincidence that Guttenberg sees ancient Babylon as the foundation of Europe’s future banking system? Revelation 18:3 reads: “[A]nd the merchants of the earth are waxed rich through the abundance of her delicacies.” A parallel prophecy in Isaiah reveals that Europe is prophesied to become the “marketplace for the nations” (Isaiah 23:3; New King James Version).
Isaiah compares the German-dominated European combine with the city Tyre, which was a key economic power in his time. Verse 13 lists “the land of the Chaldeans,” a name for modern Italy, as part of this European combine.
In alliance with Germany, the prophecy also mentions biblical Tarshish—Japan, Spain, Portugal and Latin America today. Read our article “Ships of Tarshish” to learn more about the biblical identity of these nations.
Another major power Isaiah refers to is China, using its biblical name of Chittim (verses 1, 12).
China and Europe are currently leading the way in introducing digital currency. Both have the goal to gain independence from the U.S. and both seek a greater trade union with each other.
This prophecy in Isaiah excludes Britain and the United States. Other prophecies show that these nations will be besieged by this trade alliance. Trumpet editor in chief Gerald Flurry writes in Chapter 5 of Ezekiel—The End-Time Prophet:
Ezekiel 4 describes the Tribulation as actually beginning with an economic siege against these nations. One third of the people inside that siege against Israel will die! That equates to more than 100 million people in the U.S., and more that 21 million in Britain, plus some of the Commonwealth nations. …
Notice what God commanded His Prophet Ezekiel to do: “Lie thou also upon thy left side, and lay the iniquity of the house of Israel [primarily America and Britain] upon it: according to the number of the days that thou shalt lie upon it thou shalt bear their iniquity. For I have laid upon thee the years of their iniquity, according to the number of the days, three hundred and ninety days: so shalt thou bear the iniquity of the house of Israel” (Ezekiel 4:4-5).
God is getting very detailed and specific here. He doesn’t want people to suffer any more than they have to in order to realize they don’t know the way to peace apart from God’s law. The Tribulation starts with an economic siege, and this siege will last exactly 390 days—about 13 months!
It takes a mighty alliance to besiege a superpower like the U.S. It also takes independence from the U.S. dollar. It is, therefore, no surprise that Europe and China are increasingly working together. A revolution in the banking system is about to enable their plot against the U.S. to become successful. We are about to see a major shift in world trade!
While it may seem that the U.S. economy is rising, the Bible warns that doom is near unless we repent. Request a free copy of Ezekiel—The End-Time Prophet to learn exactly what is ahead for this world and what God expects from each of us.