Central Bank Digital Currency

And How To Escape It

With central bank digital currency (CBDC), the surveillance possible under the Fourth Industrial Revolution (4-IR) is extended to commercial transactions. CDBCs are the digital versions of fiat money, or money backed not by any real marketable assets (like gold) but by the state’s promise to pay. Whereas cryptocurrencies represent a decentralized means of storing fungible assets outside of the purview and control of central banks and the state, CBDCs represent state-backed currencies under the complete control of central banks under the purview of the state. While, like cryptocurrencies, CBDCs may use blockchain technology, that is where the similarity ends. Central banks plan to adopt blockchain and other technologies and use them to fulfill their long-held ambition of exercising total centralized surveillance and control over money.

CBDC is the digital equivalent of cash, but it differs from cash in significant ways. Like cash, CBDCs are issued and backed by central banks, but unlike cash, central banks will have complete access to the distribution of CBDCs. Cash can be stored outside of banks, and spending cash cannot easily be tracked. As the Bank for International Settlements (BIS) report on CBDCs makes clear, “[a] key feature of cash is that no centralised records of holdings or transactions exist.”¹ With CBDCs, on the other hand, central banks will have access to all accounts stored in their databases. Accounts will be held by central banks directly. This will make every transaction involving digital currency transparent to central banks, which could exercise centralized surveillance and control over spending, debt, and savings. Transaction privacy will be obliterated.

As the BIS report states, “Full anonymity is not plausible…For a CBDC and its system, payments data will exist, and a key national policy question will be deciding who can access which parts of it and under what circumstances.”² The BIS also suggests that CBDCs could be “linked to a national digital identity scheme” and “[a] linked digital identity system would be a necessity to realise real improvement” in making fiscal transfers (emphasis mine).³

Central banks could also limit holdings and exact real-time taxation on transactions and negative interest rates.⁴ They may require spending at a certain rate and make holdings deposited by the state expire if not spent. They may even limit spending to what they deem to be the essentials and freeze the accounts of rebels under the guise of fighting “terrorism.”⁵ As noted by independent precious metals advisor Claudio Grass, CBDCs give totalitarian regimes another weapon in their vast digital arsenals for monitoring and controlling their subjects to hitherto undreamed-of degrees.⁶ I should add that CBDCs can make totalitarian regimes out of “democracies.”

Under this new banking system, private commercial banks could become obsolete, as banks would no longer offer a legitimate business service for profit. As the BIS notes, “[t]here is a risk of disintermediating banks” (emphasis mine)—that is, of obviating and eliminating commercial banks as accounts with central banks become universal. This could cause commercial bank holdings to decline if not disappear entirely, which would devastate the economy as banks “restrict credit supply in the economy with potential impacts on economic growth.”⁷ This potential represents a fault line in the Great Reset project. But with CBDCs, banking would take on a police function of rewarding the compliant and punishing nonconformists.

I will not treat the effects of CBDCs on monetary policy, except to say that with digital currency, central banks will be capable of granulated economic planning and interventionism, with an ability to fine-tune tracking of spending on commodities and even to direct spending to particular sectors and commodity types. As the BIS argues:

[The] Covid-19 pandemic illustrates the benefits of having efficient facilities for the government to quickly transfer funds to the public and businesses in a crisis. A CBDC system with identified users (e.g., a system linked to a national digital identity scheme) could be used for these payments (emphasis mine).⁸

The potential for abuse would be even greater than it already is under the state-backed, asset-free, cash-based monetary system in practice today. CBDCs would give central bankers the ability to bailout favored players in real time and flood markets with currency injections instantaneously. Likely, a requirement for bailouts will be an acceptable ESG score. Price controls could be introduced (think Kamala Harris’s proposal) at will to counteract the inflationary tendencies that such digital currencies would inevitably exacerbate.

Meanwhile, according to International Monetary Fund Chair and Managing Director Kristalina Georgieva, 90 percent of central banks are deliberating the institution of CBDCs.⁹ The Bahamas led the way with the first CBDC, the Sand Dollar,¹⁰ while several other countries, including Nigeria and countries in the Eastern Caribbean Union, have launched CBDCs. Pilot projects are underway in many other nations, including Canada, China, France, India, Russia, Saudi Arabia, South Africa, Uruguay, and Yemen.¹¹ China is undertaking the largest pilot project, with 140 million participants using the e-CNY.¹² At the 2022 WEF annual meeting, IMF chair Kristalina Georgieva said that China’s experimental adoption of the digital yuan prompted her to “embrace” CBDCs.

In Executive Order 14067 of March 9, 2022, the Biden regime stated that it “places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.” It further suggested that such a CBDC must ensure that “the global financial system has appropriate transparency, connectivity, and platform and architecture interoperability or transferability, as appropriate” (emphasis mine).¹³ The Federal Reserve is in the research phase for the introduction of a U.S.-backed CBDC, having published its preliminary exploratory findings in a January 2022 paper.¹⁴ The paper has been opened to comments and most of the comments are decidedly negative regarding the floated introduction of the digital dollar. The European Central Bank has signaled its support for a single digital currency, which would cement the centralization sought by European Union leaders. In short, CBDCs are the wave of the future, and the future does not look bright. CBDCs must be resisted at all costs.

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1. “Central Bank Digital Currencies: Foundational Principles and Core Features - Bank for International Settlements,” Bank for International Settlements, 2020. https://www.bis.org/publ/othp33.pdf, page 6.

2. Ibid.

3. Ibid., pages 6 and 7.

4. Ibid., page 8, footnote 7.

5. Ibid., page 6.

6. Claudio Grass, “The Dangers Posed by State-Controlled Digital Currency,” Mises Institute, July 6, 2020, https://mises.org/wire/dangers-posed-state-controlled-digital-currency.

7. “Central Bank Digital Currencies: Foundational Principles and Core Features - Bank for International Settlements,” page 8.

8. Ibid., page 6.

9. “Central Bank Digital Currencies,” World Economic Forum, May 23, 2022, https://www.weforum.org/events/world-economic-forum-annual-meeting-2022/sessions/central-bank-digital-currencies.

10. Vipin Bharathan, “Central Bank Digital Currency: The First Nationwide CBDC in the World Has Been Launched by the Bahamas,” Forbes Magazine, October 22, 2020, https://www.forbes.com/sites/vipinbharathan/2020/10/21/central-bank-digital-currency-the-first-nationwide-cbdc-in-the-world-has-been-launched-by-the-bahamas/?sh=674ec9cc506e.

11. “Central Bank Digital Currency (CBDC) Tracker,” CBDC tracker, accessed July 2, 2022, https://cbdctracker.org/.

12. Arendse Huld, “The Digital Yuan App - All You Need to Know about the New e-CNY Tool,” China Briefing News, April 14, 2022, https://www.china-briefing.com/news/china-launches-digital-yuan-app-what-you-need-to-know/.

13. “Executive Order on Ensuring Responsible Development of Digital Assets,” The White House, The United States Government, March 9, 2022, https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/.

14. “Dollar in the Age of Digital Transformation,” January 2022, https://www.federalreserve.gov/publications/files/money-and-payments-20220120.pdf.