National Digital Currencies
- National Digital Currencies KEYS
- Bank held money vs Cash - Privacy and Surveillance at stake!
- Mobile Payments, digital currency, mobile account balances - hurt bank accounts
- Bank Account Money Transfers - enable Digital Surveillance States
- National Digital Currencies enable GREATER Digital Surveillance States
- BPYR = Little Bank Presence
- Highly prevalent fraud, and Corruption
- Boost Competition - reduce cashless efficiency
- PLATFORM = Standardize the playing field like India's UBI
- Reduce systemic risk
- Cases of Digital Money across the World
National Digital Currencies KEYS
Central Banks Control a Nation's Currency - this is their FIAT CURRENCY!
Social/Marxists Wanted Central Banks
In their Communist Manifesto (1848) Karl Marx and Friedrich Engels named ten “measures” the implementation of which would lead to communism. The fifth measure reads: “Centralisation of credit in the hands of the state by a national bank with state capital and exclusive monopoly.”
Financial Innovation helps Inequality!
Economists as Whores to Capitalism
Many economists praise the national digital currency projects like digital yuan or digital euro as “innovations” and important and indispensable steps in an increasingly digitized world.
Fiat Money forms : Cash, Bank Balances, Digital
All these forms of FIAT "balances" are created “out of nothing” by the national central bankers or ECB, which has the monopoly of currency production.
Cash Money. Those who pay in cash obviously find it convenient and want to ensure their anonymity. Otherwise, they would pay electronically, i.e., transfer balances through PayPal, Apple Pay, or debit or credit cards. People don’t just hold cash for payment purposes. They also demand it to protect themselves against bank failures, for example, or they also hold cash to be liquid even in the event of power outages, to be independent of online banking.
Mobile Money However, the CBs even in China have seen state-backed banks hurt badly and out of the loop with money mobile payments. Essentially if you keep your money in WeChat or AliPay - it never goes through banks and their accounts dry up!
Digital currencies like a future digital euro is very much fiat money, just as much as cash and bank balances represent fiat money.
- Digital euro is easy for central bankers to accept as they are on the surface a “complement” to cash and bank balances.
- Just as is the case with the existing euro, the quantity of digital euros can be increased at any time, it is backed by nothing, and the digital euro carries a 100 percent risk of devaluation. As noted earlier, a digital euro would be a fiat euro.
Central Bankers want to eliminate Cash
The public suspicion is that Central Bankers like ECB is VERY interested in taking cash out of circulation cannot be refuted easily. Often CBs had tried make the use of cash unattractive: by raising the costs of cash by increasing fees at ATMs or through upper limits for cash payments, or through social stigmatization of cash (keywords: money laundering, terrorist financing, etc.).
Fiat = Negative Yields, Infinite QE, Devaluation - no limit
As soon as cash has been pushed back or stripped away entirely, monetary policymakers can implement an uninhibited negative interest rate policy to devalue debt.
Customers can no longer get out of the “bank balance sheet”; the final escape door is then locked.
Rather, the target group for the digital euro includes those who are basically content with the euro as it currently is and those who are worried about a potential banking crash. This group probably represents a fairly large number of people who come into question as a potential target clientele for the digital euro.
The plan is to allow for a 1:1 exchange of euro cash and commercial bank balances with digital euros. Economically speaking, this means that the ECB de facto insures the liabilities of the euro banks: the ECB transfers its creditworthiness, which is beyond any doubt stellar, to euro commercial banks.
With a 1:1 exchange option nobody has to worry about losing their money balances held at euro commercial banks, as the ECB has the monopoly of euro production. The ECB cannot go bankrupt; it can create euros at any time to settle its payment obligations, regardless of the amount.
That said, no one needs to worry that their balances held at a commercial bank could be lost if the bank goes bankrupt and the deposit protection fund fails. If a digital euro is publicly accepted, the scenario of euro commercial banks collapsing becomes unlikely; the euro money and credit system would be supported more than ever by the omnipotence of the ECB.
Bank held money vs Cash - Privacy and Surveillance at stake!
The digital euro can either be “account based”—you keep it in an account held with the ECB—or it can be “token based”—money users receive a “token” that can be transferred from smartphone to smartphone via an app. Hoping for “anonymity” in payment transactions would be futile in both cases, one has to fear.
Mobile Payments, digital currency, mobile account balances - hurt bank accounts
However, in the long run it is unlikely that a digital currency will prevail naturally against cash. The digital euro does not compete with crypto units such as bitcoin. After all, a digital euro is—as already mentioned—fiat money issued by the state, which is exactly what all those who are looking for better money do not want to hold.
Bank Account Money Transfers - enable Digital Surveillance States
National Digital Currencies enable GREATER Digital Surveillance States
Those who pay in cash obviously find it convenient and want to ensure their anonymity. Otherwise, they would pay electronically, i.e., transfer balances through PayPal, Apple Pay, or debit or credit cards. People don’t just hold cash for payment purposes. They also demand it to protect themselves against bank failures, for example, or they also hold cash to be liquid even in the event of power outages, to be independent of online banking.
Account-to-Account transfers are monitored closely, in fact global DOLLAR transfers need "approval" by SWIFT controlled by USA.
But if only electronic payments are possible, what little remains of “financial privacy” will be gone. The citizen becomes completely transparent, much to the liking of the state and its beneficiaries.
The Chinese digital yuan monitors nation-wide all money transfers and the only authority seeing all the data is the CCP.
The path to becoming a surveillance state regime will accelerate considerably if and when a digital euro is issued.
BPYR = Little Bank Presence
Unlike the West, credit and debit cards are not common both due to lack of credit for 1.3b Chinese and 1.3b Indians However, the use of cash is decreasing. Eventually cash will be replaced by something in digital format.
Highly prevalent fraud, and Corruption
Boost Competition - reduce cashless efficiency
Increase competition in the payments space
PLATFORM = Standardize the playing field like India's UBI
The current method is QR and OTP Codes to force transactions - In India these "links" are major ways that fraud is forced on unsuspecting illiterates! - The most popular form of mobile payment in China relies on so-called quick response (QR) codes. Users can display this barcode in their Alipay or WeChat app in a store and the merchant will scan it.
A reason for digital Yuan is maybe create a new platform payments system that will increase efficiency.
The digital yuan is not direct competitor to Alipay or WeChat Pay but a new platform that allows other players to come in and compete with WeChat and Alipay
Commercial banks could integrate similar functionality into their apps. And that Alipay and WeChat Pay could have a section of their apps dedicated to digital yuan. Meanwhile, smartphone makers could also create digital yuan wallets for their devices. The commercial banks already have the infrastructure to distribute the digital yuan and it’s better that they do it rather than the central bank.
- In China phone companies are being pushed to seize the opportunity to become payments player in the market - given the dotted lines and reference software will empower them to compete with AliPay and WePay!
Reduce systemic risk
- The Chinese market is already very advanced in cashless payments with trillions in WePay and AliPay currently far exceeding bank transactions and velocity 10x that of total money in circulation.
Cases of Digital Money across the World
A look at China probably shows where the journey is headed: the Chinese digital central bank money is supposed to have a “controlled anonymity.” In other words, “only” the People’s Bank of China—that is, the Chinese Communist Party—should have access to the payment transaction data.
The digital yuan is effectively a way for the central bank to digitalize bank notes and coins in circulation. The digital yuan would be a way to speed that process up. It will be legal tender in China and no interest will be paid on it - just a store of currency - not a bank account.
Save on Transaction Costs, Currency Printing and Turnover A CBDC could make payments more efficient and improve the transmission of monetary policy.
Fake Anonynity! PBOC reps argue that a digital yuan could help with financial stability through a system of “controllable anonymity.” This is where the payments would be anonymous to some degree, but data analysis tools could help the central bank catch illegal activities.
2021 Digital Yuan in trial
2020 Pandemic boosts Touchless Money
- There is a “pressing need to digitalize cash and coin” - Fan Yifei, Dy Governor PBOC,2020
- Producing and storing these currently is expensive. is one of the big drivers behind this” - Yan Xiao, project lead for digital trade at the World Economic Forum
Digital Euro Coming very soon!
The European Central Bank (ECB) is also working a scheme to launch “digital euro central bank money” as soon as possible.
They claimed a digital euro will be accessible for everyone, robust, secure, efficient, and compliant with applicable law.