Hasty decisions can be bad ones. We know that.
But when does careful deliberation cross the line into procrastination?
This is the internal discussion I'm having around the Reserve Bank's consideration both of producing its own digital currency and of how it should handle cryptoassets - particularly stablecoins.
I don't envy central banks trying to handle this issue, which is an enormous one. I previously examined some of the issues I'll talk about again here in an opinion piece from 2021. Disconcertingly, not that much seems to have changed on this subject in more than 12 months since I wrote that previous article.
Let's be clear. This is the hottest of hot potatoes. Maybe I'm being unkind, but the whole issue appeared to be one that most of the powers-that-be wanted to avoid till Facebook forced everybody's hand in 2019 by casually announcing that it was going to start up a stablecoin, then-called Libra THE VERY NEXT YEAR! (This is a useful definition of a stablecoin).
That got everybody interested. But with the Libra project now seemingly snuffed out, the immediate need for central banks to be moving on digital currencies and cryptoassets seems to have gone. Maybe that's not a good thing.
Because there should be urgency.
The problem is though, and I freely concede, this is an issue that would be very easy to mess up. The ramifications of messing it up could be very messy indeed.
And of course it's two interconnected issues really. Firstly is whether central banks - including our Reserve Bank - should introduce a central bank digital currency (CBDC).
Secondly is how privately developed cryptoassets should be handled.
If we look at the original cryptocurrencies, and the grandparent of them all Bitcoin, these have actually not achieved widespread adaptation as methods of payment. "Store of value" is now the commonly used term, particularly for Bitcoin.
I get the impression, although I could be wrong, that as long as the likes of Bitcoin are not being widely used as currency, the RBNZ may be happy enough to - within reason - ignore them.
What would worry the RBNZ, I think would be development of a new stablecoin, for arguments sake backed one-for-one by 'real' American dollars and launched by a credible and perhaps well known corporate entity. (Much as Facebook originally intended.)
There's a lot to like about the idea of one coin that you can spend all over the world, instantly with no messing around over bank transaction codes and exchange rates. So, an instantly credible new stablecoin could become popular very quickly.
But there are issues. One of the very interesting issues the RBNZ raises with a stablecoin is the potential for this to undermine the country's monetary sovereignty - particularly if the coin is linked to overseas currencies. Theoretically, if enough people started using these coins it could severely hamper the effectiveness of the RBNZ's use of the Official Cash Rate to help control inflation. That's because people using NZ dollars would be directly effected by OCR moves - but those using the stablecoin would not.
So, what to do?
Then there's the problem of the banks. This for me is the real head-pounder. Successful development of stablecoins could be problematic for banks (unless of course banks get directly involved). Likewise if the RBNZ goes ahead with a CBDC this could be problematic for banks.
A CBDC would be the 'real stuff' since it would carry the same government guarantee as Reserve Bank issued cash. The digital bank balances you and I have don't have the same guarantees attached. If a CBDC is therefore issued, the likes of landlords, power companies, local authorities etc are surely all going to say, "well that's the good stuff - can you pay us in that, please". This would place the banks at a significant disadvantage.
Between the successful adaptation of a privately developed stablecoin and the widespread usage of Reserve Bank CBDCs, there's obviously potential for a significant outflow of funds from the banks.
What would be done about that?
So, there's these issues I mentioned - and goodness knows, I've just scraped the surface - and then there's such things as the attitude of the public.
The RBNZ encountered some public fear and mistrust in the round of consultation it had on CBDCs earlier this year.
People are always fearful of the new and unknown. And changes in what we spend and how we spend it seem to cause particular apprehension - and suspicion.
I'm old enough to remember the Australian-launched 'Bankcard' credit card being introduced here and the scepticism, no, suspicion, the whole idea of a credit card attracted. (Yes, really.) Someone somewhere decided that the card's stylised 'b' logo in three colours looked like '666'. Yes, that's right folks, the internet didn't invent conspiracy theories.
And it is lost in the mists of time now, but I do remember there being significant pushback to eftpos at the start. Really. Impossible as it may be to believe now, there was suspicion of this too. It took a long time to get usage rolling before suddenly it became ubiquitous.
So, the Reserve Bank does have to try to 'take the public with it' on this one. But I think equally, it does have to accept that whatever it decides, some people will be suspicious of the motives and have a carp about it.
The key thing is that the RBNZ reaches clear decisions and is very clear about what it wants.
Widespread public consultation is a sound strategy in so far as it helps with the 'take-the-public-with-it' aspect of any decision making process. But equally, the public won't itself make the decision. The RBNZ has to do that. In my experience sometimes the worst thing you can do is ask the public what it wants - because sometimes it doesn't know!
So, we can discuss things round and round, but ultimately, if we think something is important enough, we simply have to bite the bullet. Hasty decisions can certainly come unstuck - but so can over-thought decisions.
The other point is that while the RBNZ appears right now to have plenty of time in which to make decisions, the possibility that it could be overtaken by events - by a private party with a stablecoin for example - definitely still exists.
A big thing missing in all the material I've seen from the RBNZ on this subject - and there's been a lot of it - has been clear deadlines for final decisions. I think it is past the time that we needed to see some sort of indication of when there will be decisions.
What would I like to see?
Personally, I have barely handled any physical cash in the past three years, having previously being a fan of always having some folding stuff in my wallet. (Yes, that's right - think back what happened nearly three years ago and that's what prompted the change.)
For me it's a no-brainer that we need to see the introduction of a RBNZ-backed digital currency that carries all the same rights as cash - an 'authentic' digital currency.
And I think a stablecoin, or stablecoins would be a fabulous adjunct to this as well - particularly for traveling and cross-border transactions.
So, I really think we need to be pushing on now with the aforementioned two things as clearly set 'desired outcomes' and work through how we want to achieve them. And then go for it. Yes, there are problems to solve as discussed further up this article.
But the reality is I don't think it is possible to achieve a move to full digitalisation of our money without ructions. It's a big change.
By going too softly-softly and not showing clear enough intent, we run, I think, a greater risk of messing up.
*This article was first published in our email for paying subscribers. See here for more details and how to subscribe.
71 Comments
Nice read David, I agree with you, some deadlines or decisions need to be made. The technology doesn't wait.
The only reason stablecoins are being adopted overusing banks is because it's borderless, instant, cheap to move without insanely stupid rules.
I get that banks have AML and regulations to follow but they overstep massively.
Why on earth would you pay $30 to wire USD to the states, wait 5 days and pay poor conversion rates in the process when you can pay $0.05 to send any amount of a stablecoin, confirmed in under a minute without any middleman BS.
I'm only 24 but used wire once about 6 years ago before finding cryptocurrency and I didn't understand why it took so long and cost so much to send money internationally. In a day in age where you can transmit limitless data in seconds to anyone, why is sending value running on a 50 year old system.
It's inevitable that decentralized blockchain systems overtake the current global payment and financial system if it does not adapt in time.
RBNZ could really milk this opportunity, but so far, they are like everything in NZ, years behind and protective of whatever they can grasp.
A NZD stablecoin in crypto would have massive usage by kiwis, just for onboarding and offramping in NZ. RBNZ could charge a minting fee, while having reserves in yield bearing TDs, making bank off it, but instead they will leave it to private to do.
Part of the reason it's faster (and cheaper) is it isn't adhering to many traditional rules around banking, or protected or regulated.
Once you have to do those things, which you usually have to if you want to operate in a legal world, things get slower and cost more.
Something in between will arise, but it'll be more like Spotify and less like Napster.
I'm not sure if I agree with the idea that stablecoins are a threat to monetary sovereignty. Anyone can already use anything they want as money. Just the other week, I gave a guy a box of beer for painting my fence.
There are two reasons why the NZD is still in demand despite the existance of beer:
- Beer is not legal tender
- You cannot pay taxes in beer
These two things are enough to keep the NZD in demand despite the existence of beer, or a million other things which could potentially be used as currency. I suspect the real threat from cryptocurrencies stems from their anonymity, and the difficulty in taxing any capital gains (which is what cryptos are actually used for - speculation - not as currency).
As for CBDCs, the only rational argument I've heard so far as to why we have to have one, is so that we can get rid of physical cash. Cash gives people a way of extracting their wealth from the financial system without having to spend it, and we can't have that, since it prevents us from doing all sorts of weird and wonderful MMT things like having negative rates of interest.
I'm not sure that's a very convincing argument, though.
Whether or not Bitcoin is receiving the level of adoption that we expect, shouldn't take away from the fact that it's been running 24/7 for 14 years now and isn't showing signs of disappearing anytime soon.
Crazy idea, but maybe we just start simple and give Bitcoin its own clear regulation first and then worry about the rest thereafter. All assets based on a blockchain protocol are not at all the same, or even attempting to achieve the same outcomes.
We need to remove obstacles to adoption for everyday users. The first thing we need is a de minimus threshold for taxable transactions. i.e. right now if I want to buy a chuppa chupp with bitcoin I need to log it for EOY as a taxable event. People are much less likely to want to use it as a means of payment if they need to do that every time.
In my opinion it should be something like all transactions below $200 are non-taxable events. This way you can go out and buy your missus a nice dinner, pay with your bitcoin and not have to go home and open up a spreadsheet to log ten different bits of data to decipher capital gains/loss. This takes all the efficiency out of a very quick means of payment.
"This takes all the efficiency out of a very quick means of payment."
How fast is it? From what I can Google, a Bitcoin transaction takes between 10 minutes and an hour to complete. Please correct me if I am wrong, I have never done one before.
Anyway, I never felt EFTPOS/CC was so slow that we needed a solution anyway. What does it take, 3-4 seconds to complete a transaction after authentication (PIN or sign)?
Hi, as someone who has done a fair few transactions - Bitcoin transactions take anywhere between a fraction of a second and ten minutes. I'm not sure where you're getting an hour from - from a purely technical standpoint, it should not be possible for a transaction to take longer than 10 minutes to process.
I've probably done close to a hundred BTC transactions. Most (90%+) are done within a second or so. A few took 10 to 20 seconds. The longest was probably about a minute.
When you use EFTPOS, you are able to make the payment instantly, but it will take a few weeks before your bank and the merchant's bank have actually settled ie transmitted the money from your account to their account (in a basic sense, what has happened is that you have exchanged ious with the merchant, and a few weeks later, the banks have figured out all the technical details and actually shipped money between them).
When you use Bitcoin, settlement happens at the same time that payment is made. The merchant gets the money as soon as the payment is made. That's the innovation. Whether you think it's a useful innovation or not is up to you.
That's why people call Bitcoin 'digital cash'. Cash (physical cash) is the best analogy to Bitcoin in that settlement is made as soon as payment is made, unlike digital transactions.
Do you use cash to buy from shops currently as you value it's instant settlement feature, or do you use credit/eftpos cards for convenience?
As far as I can tell from the eftpos website, the merchant gets the money in their bank account overnight. If the banks actually take a few weeks to settle the payments between them, does it really matter? The banks seem to work it all out just fine.
I'm not saying Bitcoin is good or bad. Just explaining what it is and what makes it unique.
Yes, personally I couldn't give a shit when I go to the store if I use cash or a card. But in other instances, I do care. For me personally, I use Bitcoin for sending money overseas. It's much easier and faster for me to use the Bitcoin network than the traditional banking system. The instant settlement element of it means I don't have to wait for the banks to go through the normal 2-5 day wire process.
Whether or not Bitcoin is receiving the level of adoption that we expect, shouldn't take away from the fact that it's been running 24/7 for 14 years now and isn't showing signs of disappearing anytime soon.
There are number of different metrics you can use to measure BTC adoption (https://studio.glassnode.com/dashboards/btc-core-on-chain). Even during the current crash, network activitiy is increasing -- meaning BTC is being added to people's stash -- and new users are dipping their toes (albeit at a slower rate than the wild times of 2021).
BTC adoption is actually increasing at a rate faster than interent adoption based on some analysis I've seen. But it's very early days.
Has the RBNZ or any other central bank ever outlined the level of control over a CBDC they would have?
Will the software be open source and will the government have the ability to blacklist users because that seems to be a big red line to many people, including me.
There is an interesting video on you tube of CBDCs in the UK, fiction or a possible reality? https://m.youtube.com/watch?v=AuLLJsWttlk
We already have a central bank digital currency and all interbank payments use it. You need to have an account at the RB to be able to use it though. Government bonds are also another form of this currency. All bank issued money is backed by government digital currency in the payment system.
As long as we are required to pay our taxes in NZ Dollars then we must always need to use them. People are always free to use any form of money that they wish to as long as others will accept it in payment but the government only accepts NZ Dollars. How would we pay GST on a transaction as it would need to be paid in NZ Dollars.
We already have a central bank digital currency and all interbank payments use it.
Yes. And that currency is inextricably linked to a monetary policy that you have little or no influence over. You also don't have any say in the monetary policy of BTC. Regardless, the difference between the two monetary policies is stark. One policy robs the value of money through dilution; the other considers 'store of value' as a fundamental property of money. The creation of BTC is partly a protest against central bank hegemony. But it's not a reactionary protest. It's a well considered expression of what many people believe and think money should be.
I don't fully understand crypto and I especially don't understand the claim that crypto offers a "store of value". How can that be, when the value of said crypto can easily halve? (I'm happy to be educated)
Crypto and BTC are fundamentally different things Dr Yvil. SO while BTC can be considered a 'SoV' because of its monetary policy (supply cannot be diluted), that may not apply to say Dogecoin.
Depends. The person who bought at USD60K may also have been buying BTC at $5K. Those who first bought at 60K will likely feel differently. But anyone buying BTC for the first time should understand that the fiat price is volatile and buying near ATHs will likely mean the fiat price will fall at some stage.
Hi Yvil. The cardinal point to note is that when you buy bitcoin, you choose your 'store of value' to be measured in bitcoin. Not in the worlds perception of bitcoin, i.e. price in dollars.
Hence, if you bought 0.37654 bitcoin in Nov 2021, it is still worth 0.37654 bitcoin today regardless of price.
Now you'll probably say "yeah but everythings priced in dollars not bitcoin." However, by you being someone who understands the value of bitcoin, you open yourself up to trading it with every other person in the world with a wallet who sees that same value as you. And, you would imagine that number of people will increase over time considering all 14 year old kids have now had bitcoin in their lives forever.
Yes, the internet. The thing that literally connects the entire world, can now be divided into points and these points can be sent to anyone, anywhere on the planet in 10 minutes. Oh, and no one can randomly decide to make more of them at will.
Starting to sound like a pretty good idea actually...
That is interesting, an actual shop that accepts bitcoin. How do they charge you? They don't have bitcoin prices on the menu. I expect they calculate the exchange rate from NZD when you pay?
I guess you need to know what a satoshi is currently worth in NZD in order to check they didn't make a mistake with the extra calculation they have to do (do they just use a calculator? or have they got an app for it?). I expect it would take a while till you became able to instinctively know the price of things in bitcoin. As you currently can only ever use it at this one shop.
A lot like shopping overseas with their currency I guess, but in this case you are both slightly confused and uncomfortable as you are both using a currency you don't deal with a lot.
IMO they should go the opposite direction and print huge reserves to plough into their own meme coins, and just use them to rug people in other countries. What better way to fight inflation we have to import than by crippling consumers in other countries with scam after scam?
IMO they should go the opposite direction and print huge reserves to plough into their own meme coins, and just use them to rug people in other countries.
USD hegemony can be a curse for many developing countries. The leadership of Russia and China understand this better than most people in the West.
If you are saying they understand how to trap developing nations into debt for their own benefit then I agree with you. If you are saying Russia and China wish to free the developing world for the greater good then I disagree.
https://www.cnbc.com/2021/09/30/study-chinese-loans-leave-developing-co…
https://shipsandports.com.ng/chinas-cheap-loan-slavery/
https://www.japantimes.co.jp/opinion/2022/12/04/commentary/world-commen…
https://www.cnbc.com/2017/12/22/one-belt-one-road-china-loans-are-debt-…
https://central.asia-news.com/en_GB/articles/cnmi_ca/features/2021/07/1…
https://www.dtnext.in/edit/2022/11/25/shylock-s-grip-a-spotlight-on-chi…
https://cepa.org/article/chinas-trojan-gift-creditor-imperialism/
https://thehill.com/opinion/international/551337-chinas-debt-trap-diplo…
https://www.zerohedge.com/geopolitical/chinas-debt-trap-diplomacy-third…
Bitcoin was created to free people from the constraints, regulation, and centralisation of central banking. Bitcoin is freedom. CBDCs are a hell in which citizens have little privacy, freedom or control. CBDCs are antithetical to bitcoin.
The freedom to transact is a fundamental right that all other rights rely so heavily upon. CBDCs create the ability for the freedom to transact to be removed at the whim of the state. That is a dangerous road to walk down. People should be afraid of CBDCs but not because it's a new technology.
CBDCs are not the 'real stuff' the real stuff is what the market chooses to use as money. Fiat and CBDCs are used only because of the state's monopoly on violence. One must pay one's taxes in the state currency or risk losing liberty. No other person or entity has that level of power.
Further, you cannot comment on Bitcoin payment adoption without considering the Lightning Network... the work companies like Strike are doing for international payments is going to destroy international banking as we know it. P2P, interoperable, and near instant finality of settlement. RIP Western Union.
You would still be free to make payments through the banking system by using eftpos or credit cards ect, CBDC would probably only replace cash or give an alternative to it and without incurring any bank fees. There is no secrecy in the present system either, IRD is always watching.
The government will always spend using its own currency and who is going to refuse to accept it? Taxation is used to control total demand in the economy and to free up resources for the public purpose, we would have economic anarchy without central control of our financial system.
I don't think you have considered the whole picture. CBDCs completely eliminate the need for transactional banking services, whether eftpos, internet banking or provision of cash. Banks may become lenders only.
I agree there is already little secrecy in the current system but still far more than under a CBDC system. If I buy a loaf of bread from the supermarket via eftpos, I know what I bought and the supermarket knows what I bought. My bank knows I spent $X at the supermarket but do not know what I bought. The IRD might but probably wouldn't request information about the transaction from me or my bank. Under a CBDC system, the state can dictate what the CBDC can be spent on (or not spent on) and will have direct access to all transaction information. So, if the state decided I could only buy wholegrain bread on a Tuesday between the hours of 2 and 4pm, that can be programmed in. CBDCs enable citizens' transactions to be programmable. That is dangerous.
The state shouldn't be the creators or dictators of money. They should use the same money as everyone else does, much as they did up until the 1930's.
Separate money from state.
i don't see how banks can be removed from our payment system when they are creating the majority of our money, nearly all bank deposits are created through their lending and the government is not going to start funding all credit creation.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creati…
Philosophically I like Bitcoin for its decentralisation and inability to be controlled by governments. The altcoins are all variously centralised as to control and don't count.
But for the same reason I like Bitcoin, I hate the whole notion of a CBDC. Outside of control over us, what is the monetary point of it? What problem is a central bank trying to solve with this? Because if there isn't a damned good one, then we should all resist it. The government especially has already grown it's power under emergency and urgency far too much; it doesn't need more control over us.
Good questions. I've wondered about this and thought that CBDCs would be ideal for distributing UBI (if it ever came into existence). But there's a problem here as ultimately I see UBI as something that would be enacted by govt. Central banks operate as a proxy agent for govt. So in this case, I'm personally not comfortable with this power relationship between govt / central banks and citizens. It is in many respects Orwellian.
Another benefit of CBDCs is distribution -- for ex, the distribution of helicopter money, income support, etc. Arguably, this could be done fare more efficiently with CBDCs. But this is a technology issue. And once again, the agency of power will still exist.
Economist Michael Hudson has studied the history of money and even from early times going back thousands of years money has been issued and controlled by the state in whatever form it took. When governments loose control of their money then chaos ensues as in Zimbabwe for example. Once a government can no longer finance itself in its own currency then it must borrow in another currency and it will eventually become insolvent. and how do we finance our current account deficits without our own money?
Bitcoin = antithesis of CBDC's.
CBDC's = WEF Financial yoke over Global Human Activity
Achieved by Digitalisation of Human Life through AI, Big Tech and Government Control of Human activity Pushed by WEF Globalists. (think: Gates, SBF,Trudeau, Ardern etc etc)
Klaus has been Engineering for this Level of Control using Trojan Horses aka ESG, Climate Emergency, Pandemic, European War since he initiated the WEF in 1971.
The recent G20 extends the WEF Globalists Policy Framework.
The next 24 months will be fascinating. Will USA continue to stoke the War flames by providing weapons while Zelensky launches their own CBDC?
Will Putin stop Uranium supply to Europe / USA as a retaliatory Financial attack for Price caps on oil?
Will Trudeau continue to stop cheap Canadian oil to flow to freezing European people despite what his Provincial Governors want?
Will Ardern do a U turn on banning Fossil Fuel exploration in NZ off shore waters?
Will the EU make food production hard for Dutch farmers like WEF Youth Global Leader Ardern's Government doing here in NZ?
Will Biden's depletion of the US Oil Inventories assist a Price Spike in fossil fuels as China opens up increasingl demand?
Will the Aussie Politicians now windfall tax Coal companies despite this coal being used for steel production, energy and electricity and these companies being perceived as akin to the Devil for years and years by the political elite and big investment companies n superannuation funds?
And can anyone sensible explain why this graph should or should not be reassuring...
https://fred.stlouisfed.org/series/RESPPLLOPNWW
That doesn't make sense to me.
The money I have in my bank account is NZD, not ANZD or WestpacD or KiwiBankD.
My points is that this digital money is already issued/backed by the Reserve Bank of NZ. How is the NZD not already, largely, a Digital Currency issued by a Central Bank, i.e., a CBDC?
The money I have in my bank account is NZD, not ANZD or WestpacD or KiwiBankD.
It actually kind of is.
The money in your bank account is not the same money as the cash in your wallet, even if they're the same currency. The first is "bank money", created and issued by ANZ/Westpac/KiwiBank/etc. The second represents a central bank liability, and is therefore much "harder" money.
My points is that this digital money is already issued/backed by the Reserve Bank of NZ.
That's not true, unfortunately.
It would probably work in a similar way to when you bank cash, the bank credits your account with bank dollars and keeps the cash in its vault or sends it back to the Reserve Bank and receives central bank reserves in its reserve account. Of course with CBDC it would straight away become bank reserves in the banks reserve account at the RB or banks might have a separate account for CBDC themselves for exchanging. We don't know any details at the moment.
They are both digital, but a CBDC has one, centralised ledger (Bitcoin has one, decentralised ledger).
Our transactions as a NZ economy are mostly distributed across many centralised bank ledgers, and cash , which is largely untraceable.
A CBDC records every transaction and debits and credits on one ledger, and of course it's also digital.
Implications: government controls and can see all transactions. Easy to tax, add or reduce liquidity, use your imagination for the rest.
Retail banks reason for being is shaken. Will probably still exist for a while, but will be a post-Uber taxi industry.
CBDCs and crypto have some key similarities, so it's not logical to write off crypto and support CBDCs, unless you are a big statist.
I think that CBDCs will coincide uncomfortably will crypto for the near future. Many crypto projects will go bust. But some CBDC projects will also go rotten and some will flee into the arms of risky crypto.
From the point of view of one bank, its own ledger is centralised, they can see all their own transactions, but not those of other banks .
So conceptually I think it's many centralised ledgers. But I can see how one could also see that whole system as "decentralised"
Completely utterly Different.
Digital dollars can be transacted in Cash. A hard Currency. You can trade cash and then store digitally.
A CBDC is a programmable code. For example: the WEF / IMF / RBNZ can programme the value. eg 200 for spending at x , y or z before x date. OR instant removal of CBDC based on facial recognition based on social security score. Think: jay walking (in China now) through to fines.
The CBDC programmed to use at Corporations of the Central PLanners choice (think Metaverse / etc: Read this: https://www.weforum.org/topics/the-metaverse/
We are at real risk for Central Planners Control
eg Energy rationing through a set CBDC of energy for travel , mandated Big pharma rollouts. etc etc
I think it could be a boon to have a digital NZD, and be allowed to open our own accounts at the RBNZ. A real KIwibank! And we could borrow money at the OCR...
Anyway, how would that stop banks from going about their proper business of lending out capital based on their skill in risk assessment?
I agree. I'd be perfectly happy to bank with the RBNZ instead of a private, profit-making bank. A cbdc currency. Let's call it the Zeal.
David Hargreaves worries unnecessarily about the trading banks. Like every other business, they are only good if they are useful, and when we all have accounts with the RBNZ the trading banks will be able to focus on their real business as lenders and deposit-takers.
I think TOP, The Opportunities Party, would be happy with every citizen having an account with the RBNZ into which their UBI, their universal basic income, would be deposited.
That's the way to begin now: by requiring NZ Super recipients and all other beneficiaries to have RBNZ accounts.
But the challenge will still be to be able to bypass banks and enabling direct person-to-person, person-to-business, business-to-business electronic transfers from one electronic wallet to another, without having to go via a bank, I think. (Unless every single holder of New Zealand currency must have an RBNZ and the folding stuff is abolished.)
They will probably keep doing that, but their moat will be more smaller. Gone will be their quasi monopoly status.
If all they do is lend then maybe there will be 100 online competitors relying on algorithms and low margins. "Defi" if you will. Regulated or otherwise.
The real drive behind CBDC is the fact that they are programmable. So access to money can be restricted or removed at will. This is why they are linked to the development of social credit scores. Much like Canada froze the bank accounts of protesters, and Iran is freezing the bank accounts of women who refuse to wear the hijab.
It gets more sinister when you realise they can give favourable monetary treatment to certain sections of the population - ie. a Pakeha person's dollar may be deemed to only be worth 80c while a Maori person's dollar is worth $1. So retail prices effectively become dynamic depending on who you are and the social justice whims of the Govt and Central Banks.
Then its also linked to your digital ID. Say the wrong thing on Facebook and $1000 is immediately deleted. Be found in a non-permitted area like Parliament Lawn and there goes your total balance. At the end of the day, its not about money its about control. Welcome to your future.
Well said K. W. absolutely agree.
This news is concerning:
will the missing $65 Trillion be Black Swan Event for the WEF to bailout the BIS / IMF etc etc using CBDC in 2023....
https://www.youtube.com/watch?v=pgnLwWw-IFU
https://www.washingtonpost.com/business/its-the-65-trillion-in-debt-you…
So the question is... why isn't mainstream NZ media covering this news??
And the Debt is growing.... rapidly:
https://markets.businessinsider.com/news/currencies/80-trillion-off-bal…
OK so.... will the missing $65 Trillionbe Black Swan Event for the WEF to bailout the BIS / IMF etc etc using CBDC in 2023....
https://www.youtube.com/watch?v=pgnLwWw-IFU
https://www.washingtonpost.com/business/its-the-65-trillion-in-debt-you…
So the question is... why isn't mainstream NZ media covering this news??
And the Debt is growing.... rapidly:
https://markets.businessinsider.com/news/currencies/80-trillion-off-bal…
I get the feeling that David doesn't really understand this topic. This is a superficial establishment view he is giving.
The issue with CBDCs is that they would be extremely dangerous in the wrong hands. In effect they give the central bank/the government 100% custody and control over your money/life. Beneficiaries for example could be prevented from buying alcohol. People born after a certain year could be prevented from buying cigarettes. Certain people could be easily prevented from traveling to certain places. Protesters could have their assets easily frozen along with those they had interacted with. There will be zero financial privacy. It is a whole new ballpark to eftpos and credit cards.
I think it is wise that we are very careful about going down this path and the public needs to be very aware about what it is potentially getting itself into.
They won’t because the media won’t tell them. Not even here at interest is he telling us the obvious pitfalls of a CBDC.
you need to look no further than China and how they use their CBDC tied to their social credit scores how anti freedom it is and also how the WEF who our very own prime minister is a member of their young leaders school how it will be used here. Oh you have gone over your allowed monthly carbon limited, you can’t travel here, or you can’t beat meat this week.
Professor Richard Werner is very good at breaking down how the banking system works, how de-centralised, small, local, community banks are the backbone of successful economies not large banks that tend to lend to large businesses. He warns about the potential control of CBDCs...along the lines of Engineers post. You don't have to listen to the entirety of the first video- the intro tells you his credentials. The second on outlines how to set up a community bank.
Here are a couple of YouTubes
https://www.youtube.com/watch?v=QECujWeIjpg
https://www.youtube.com/watch?v=sLCMgDj5T-g
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