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The Dark Truth Behind CBDC's.

Added 2023-09-25 17:46:58 +0000 UTC

Everyone is fascinated by the new technology introduced by central banks.

The Central Bank Digital Currency (CBDC).

Which is expected to revolutionise the future of our financial system, right?

However, that's quite far from the truth.

In fact, it's far from accurate.

Before I proceed, let me explain what the CBDC actually is.

A CBDC, or Central Bank Digital Currency, is like a digital version of the money we use today.

It's issued and regulated by the government's central bank, just like regular cash.

There are a few reasons why Governments want to introduce CBDCs.

I will explain them below:

1. Improving Efficiency:

CBDCs will make transactions faster and cheaper, helping people send and receive money more easily.

For example, sending money to a friend or family member in another country can take days and involve high fees with traditional banking systems.

With CBDCs, these transactions could be completed in minutes, and the fees might be much lower, making it easier and more affordable to send money internationally.

This is similar to bank transfer but with Speed and easier accessibility.

See it is a digital pound or a digital dollar.

2. Reducing Fraud:

Digital currencies will be more secure than physical cash, reducing the risk of counterfeiting and other types of fraud.

For instance, physical cash can be easily counterfeited, causing significant financial losses.

Think of all the dirty cash that is out there that the government doesn't know about.

All the drug money or untaxed cash.

CBDCs would put an end to this.

CBDCs would use encryption and blockchain technology to make sure each unit of currency is genuine.

This reduces the risk of fraud and ensures the money's authenticity.

3. Financial Inclusion:

CBDCs will provide access to banking services for people who don't have traditional bank accounts, promoting financial inclusion.

In many parts of the world, there are "unbanked" populations who can't open bank accounts due to various reasons, like lack of documentation or living in remote areas.

CBDCs can be accessed through digital wallets on smartphones, allowing these individuals to participate in the financial system.

For example, a farmer in a remote village could receive payments for their crops in CBDC and use it for other transactions.

Yes, this is similar to crypto, but in this case, the government controls it.

4. Tracking Transactions:

CBDCs will help governments keep track of money flows, which can be useful for things like tax collection and preventing illegal activities.

They can identify tax evasion more easily.

Also, prevent money laundering, and ensure that each business pays its fair share of taxes.

This transparency can help governments fund essential services and infrastructure projects.

5. Adapting to a Digital World:

In a world where many transactions are already digital, CBDCs help governments keep up with the times.

So, the government sees CBDCs as a way to address some of the problems with the old cash system and make the financial system more efficient and secure for everyone.

Just look at the chart below which shows the decline of cash payments.

This chart shows that the majority of payments in the UK are now made by transfers of bank deposits.

Nearly half of all payments that were previously made in cash are now made by card (debit and credit).

Now, you might be thinking that everything discussed so far seems reasonable and perhaps even beneficial.

However, here's where things take an interesting turn.

Keep reading on.

While Central Bank Digital Currencies (CBDCs) have legitimate reasons for the introduction.

There are some concerns.

These concerns are regarding potential misuse for more control or surveillance.

Here are some reasons why governments might want CBDCs for more control:

1. Enhanced Surveillance:

CBDCs provide governments with the ability to monitor citizens' financial transactions more closely.

For instance, governments will track how people spend their money to ensure compliance with tax laws, but this level of surveillance would come at the cost of an individual's privacy.

Do you know what is ironic?

While governments argue that increased surveillance can help combat tax evasion and illicit activities,

It will erode your personal privacy.

Imagine a scenario where every financial transaction you make, from buying shopping to donating to a charity, is closely monitored and recorded.

And then it gets even worse my friend.

Imagine where your financial transactions, combined with other data points, contribute to a government-issued social credit score.

This score can influence your access to various services, including loans, jobs, or even travel.

This level of intrusion raises concerns about personal freedom and the potential for abuse, where citizens may fear repercussions for their financial choices or beliefs.

2. Reducing Cash Usage:

Governments will want to discourage the use of physical cash because it is harder to track and control.

I am not saying it will replace cash.

However, there will be benefits to using the CBDC which will discourage the use of cash.

CBDCs will help the government monitor and control every financial transaction within their jurisdiction.

Discouraging physical cash usage might seem convenient, but it is unsettling for those who value financial anonymity.

CBDCs offer governments unprecedented control over citizens' financial lives, which will lead to restrictions on how people can spend their money.

In extreme cases, governments might even freeze or confiscate assets digitally, leaving individuals with little recourse to protect their financial well-being.

3. Negative Interest Rates:

In economic crises, governments will want to implement negative interest rates to encourage spending and investment.

Why?

With CBDCs, they will directly impose negative interest rates on people's digital holdings.

This will effectively charge people for saving money and force them to spend and "boost the economy".

While this is an economic policy tool, it can also be seen as a way to influence citizens' financial decisions.

Dirty game, I know.

And the most dangerous of them all is this next point.

Point number 4.

4. Easier Money Creation:

With CBDCs, governments can create and distribute money digitally, making it more accessible than printing physical currency.

With greater ease and speed than printing physical currency.

This ease of money creation can be tempting for governments, especially in times of economic crisis, as they can quickly inject funds into the economy.

This flexibility is advantageous during economic emergencies because it enables rapid response.

However.

I am sure you know it can lead to inflation and devalue the currency.

Which will potentially harm citizens' purchasing power and savings.

Now, you can see how this poses a significant threat to our society.

It's a threat that affects every individual.