The Potential Orwellian Horror of Central Bank Digital Currencies
As citizens around the world are confronted with the severe curtailment of political, economic and cultural freedoms associated with COVID-19 risk mitigation strategies (e.g., lockdowns, mandatory vaccinations and/or vaccine passports), new risks to economic freedom and prosperity are quickly emerging which citizens must be aware of and remain vigilant about.
One of these risks which is developing with rapid pace are Central Bank Digital Currencies (CBDCs). According to a Bank of International Settlements (BIS) 2021 survey:
- 86% of central banks are actively researching the potential for CBDCs;
- 60% were experimenting with CBDC associated technology; and
- 14% were deploying CBDC pilot projects.
The development of CBDCs potentially represents one of the largest changes to modern banking and finance (as well as the global financial system) in decades, even though, as noted by the BIS, the concept was proposed by American economist, James Tobin, in 1987.
Current Structure of Currency
As noted by the International Monetary Fund in 2021, economies around the world currently operate under a “dual monetary system” comprising of:
- Publicly-issued currency by central banks in the form of physical cash (coins or banknotes) and central bank reserves which constitute legal tender (i.e., form of currency or money which are legally recognised as a means of payment to settle financial obligations such as debts, taxes, contracts, legal fines or damages); and
- Privately-issued currency by private commercial banks, telecom companies and specialised private payment providers – that is, digital forms of legal tender that are issued and held by non-government financial institutions (e.g., bank deposits or balances held in payment systems such as Paypal or Alipay).
An important distinction of this dual system is that physical cash and central bank reserves are the liabilities of central banks, whereas privately-issued currency is the liabilities of private sector payment providers.
Definition of CBDCs
CBDCs are digital or virtual forms of physical cash represented through an electronic record or digital token that is issued and regulated by a country’s central monetary authority (i.e., its central bank) via a centralised ledger.
CBDCs are centralised, which stand in stark contrast to privately-issued cryptocurrencies (such as Bitcoin) which are decentralised and unregulated.
CBDCs are not uniform and central banks have an immense range of legal, technical, operational and administrative design options to achieve their stated public policy objectives. Importantly, the policy intent of CBDCs will be neither uniform across jurisdictions nor static in time. Instead, they will tend to be a function of a country’s economic, political and social context.
Thus, in assessing whether a proposed CBDC will, in net terms, improve or impair the function of a monetary system and broader economy, each CBDC will require individualised scrutiny and assessment.
NatWest, one of Britain’s largest lenders, is set to appear in court in London to respond to charges that it failed to properly scrutinise a gold-dealing client that deposited £365m ($502m) with the bank—£264m of it in cash.
Last year global banks were hit with $10.4bn in fines for money-laundering violations, an increase of more than 80% on 2019, according to Fenergo, a compliance-software firm. In January Capital One, an American bank, was fined $390m for failing to report thousands of fishy transactions. Danske Bank is still dealing with the fallout of a scandal that erupted in 2018. Over $200bn of potentially dirty money was washed through the Danish lender’s Estonian branch while executives missed or ignored a sea of red flags.
Digital privacy – including financial privacy – is readily available via encrypted communication, and peer-to-peer value transfer solutions. However, the latter quality can scarcely be expected to be implemented in CBDCs by governments eager to control their population.
The continued efforts of central banks to position CBDCs as advancement from analog systems via labels such as ‘Digital Dollar’, requires us to point out the obvious: fiat currencies have been predominantly digitally native for decades, and are stored and moved as bytes. A meaningful departure from the current state of banking technology would necessarily have to include the creation of digital bearer instruments which would not depend on the use of middlemen.
However, this would effectively void the need for demand deposit accounts (“checking accounts”) entirely, as the technical limits of bytes are based in physics. In simple terms: any user would be able to move bytes labelled as fiat currency entry from a yield-bearing state to the recipients yield-bearing account.
With that the ability of financial service providers to extract fees from the movement of bytes would vanish, after all users tend to not put stamps on their emails. This, somewhat obvious conclusion, even made it into several CBDC research papers, and promptly caused the commissioning central banks to halt any development of a CBDC, realizing that fees for payments today comprise on average 30% of commercial bank revenues, these institutions would largely seize to exist.
DO NOT LISTEN for anyone’s opinion on this matter !!!
Opinions are a dime a bucket anyway !!!
Not even mine !!!
DO ALWAYS YOUR OWN DILIGENCE AND RESEARCH !!!
And when the time will come… You shall know the best choice to make for you and future generations to come !!!
It’s actually more about them than us !!!
But we will pave the way for them…
Let’s not make it and Dystopical Orwellian one people !!!
IMHO (In My Honest Opinion) CBDC’s are nothing more than “1984” v 2.0 !!!
But who am I ?¿ but just a leaf in the wind…
Here below are some links that could be a great place to start making your own Research and due diligence !!!
Sharing is caring they say, so here you are people :
To be always Updated !!!
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- Free Spirit’s LibraryHy there my fellow citizens of this amazingly beautiful Mother Earth of… Not Ours !!! We tend to forget that and treat it as if we would have another habitable sphere on wich … Continue reading Free Spirit’s Library
- What is Bretton Woods ?!?The Bretton Woods Conference, formally known as the United Nations Monetary and Financial Conference, was the gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton … Continue reading What is Bretton Woods ?!?
- Smart Contracts by Nick Szabo-1994A smart contract is a computerized transaction protocol that executes the terms of a contract. The general objectives of smart contract design are to satisfy common contractual conditions (such as payment terms, liens, … Continue reading Smart Contracts by Nick Szabo-1994