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July 9, 2023 | CBDCs Are Coming. Mark Jeftovic Explains Why You Should Worry

John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.

Most central banks have decided that 2024 is the year of the CBDC Big Bang. So…what exactly are these things and why should we find their imposition worth opposing?

Mark Jeftovic, publisher of the Bitcoin Capitalist newsletter, just posted a detailed explanation. Here’s an excerpt:

BIS: CBDC Roll-outs may require changing The Constitution

Also: “Tiered remuneration” means no privacy and negative interest rates.

The IMF is warning that with all these CBDCs about to launch, there need to be global inter-operability standards between them all, and they’re working on a global platform to facilitate just that.

Speaking at a conference of African central banks in Rabat, Morocco, IMF Managing Director Kristalina Georgieva said that there needs to be agreement among CBDC implementations,

“on a common regulatory framework for digital currencies that will allow global interoperability. Failure to agree on a common platform would create a vacuum that would likely be filled by cryptocurrencies”

Not to be outdone, the Bank of International Settlements (BIS) worked with seven central banks to publish YARP (Yet Another Research Paper) on CBDC policy, entitled “Central Bank Digital Currencies: ongoing policy perspectives”… (*yawn*).

The central banks involved were: Japan, Sweden, Switzerland, England, the United States, Canada, and the European Union.

The paper is mostly a snoozer:

“Development of CBDC work requires careful consideration and engagement with a wide range of stakeholders, including the private sector and legislators”… 

“To successfully meet its public policy objectives, a CBDC ecosystem should allow a wide range of private and public stakeholders to participate and, in doing so, deliver services which benefit end users.”…

“The complex design questions and the potential risks arising from the implementation of any CBDC require careful consideration.”

Until you get to the rather innocuous sounding Annexes, like “Box 2: Legal Considerations”.

What are retail CBDCs, exactly?

The paper wonders: Are they cash? Deposits? Or something else entirely?

This is quite the question, because if CBDCs aren’t cash, there has to be a reason why they wouldn’t be. When you start to see where CBDCs are going: expiry dates, programability, social credit scores – what we’re talking about is almost a kind of anti-cash (my observation, not the paper’s).

Further, the paper wonders, would there need to be changes to banking charters, legislation or even the constitutions of the countries issuing them:

“Legislation may need to be enacted or adjusted to specifically authorise the issuance and distribution of a retail CBDC (eg changes to central bank charters/statuteslegislation in other areas related to payments or to the constitution itself)”

Who had “new Constitutional convention” on their bingo card for the roll-out of CBDCs? We do now.

Box 3:  What tools may be needed to manage stressed conditions?

Here we truly get a peak behind the curtain – and it’s all dressed up in that Davos-dialect of benign-sounding euphemisms that belie a Brave New World (like how “recontextualizing food chains” basically means banning the peasants from eating meat).

They get right to it:

“When considering potential tools and policies to manage stressed conditions (eg limiting or managing fund outflows from bank deposits), there are price and quantity control approaches, with a mix of the two also being possible”

Those would be your bank deposits. In this section they’re gaming out how to contain bank runs.

“Quantity holding limits have the advantage of directly limiting the extent of potentially harmful levels of disintermediation (eg structural changes resulting from CBDC adoption that increase the cost or availability of credit across the economy), and being relatively simple to implement.

However, they also have disadvantages, such as potentially impacting adoption; this may happen if holding limits increase the risk of failed transactions occurring, or make CBDC transactions less convenient, especially if alternative forms of digital money (eg stablecoins) do not present similar limits.

Translation: We can cap how much money SerfCoin you’re permitted to hold, so we don’t blow up the system with too much SerfCoin issuance, but if we do that, you may not want to hold SerfCoin, opting for stablecoins (and cryptos) instead – where no such limits would apply.


There’s much more. Read the rest of Jeftovic’s article here.

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July 9th, 2023

Posted In: John Rubino Substack

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