RANT: GIVE ME YOUR MONEY, HONEY!

 

Central Bank Digital Currencies (CBDCs). In the next few years, they may become a reality in several countries, including Canada. According to one survey, over 130 countries are conducting feasibility studies around implementing such systems. Several, including China, are pilot testing CBDCs. The US Federal Reserve is studying a roll-out of a “wholesale” (bank-to-bank) version, with a retail digital currency (for the general public) later on. The Bahamas has the "Sand Dollar", launched in 2020, the world's first digital currency. The Bank of Canada (BofC), having completed a recent survey of public opinion on CBDCs (which I filled out, incidentally), is in the process of researching whether such a system might better ensure “everyone always has the opportunity to take part in the economy”, as well as protecting our economy from the effects of unstable, foreign cryptocurrencies; to facilitate trade and commerce, etc.

Yawn. Sounds good. Who uses cash anymore? We’ve got debit cards, credit cards, online banking and money apps out the wazoo. What’s the big deal? Though CBDCs sound efficient and safe. And they're regulated, backed by the Bank of Canada, unlike unstable cryptocurrencies. (Think: FTX.) They say CBDCs make financial transactions convenient and speedy. What’s not to like? 

WHO CARES how they work? Besides, running a digital currency is in the wheelhouse of quants and nerds, so have at it, you Poindexters! Anyway, aren’t digital currencies just fine-tuning our big, bad economic engine, just polishing the shine on our gold doubloons? Move along. Nothing to see here....

THAT’S A MINDSET we often see in our smart and most modern of days. CBDCs are something to put on our brain’s back burner in the “I-Can’t-Think-About-That-Now-I’ve-Got-Too-Much-On-My-Plate" file. Nevertheless, it behooves us to look under the hood of this scheme, concocted by our betters, with the stated goal of making our lives “safer”, more “convenient”, more” productive”, and one step closer to that techno-utopia we all dream of.

 

“A CBDC's main goal is to provide businesses and consumers with privacy, transferability, convenience, accessibility, and financial security. Many individuals throughout the world have no access to bank accounts, so a CBDC would give them a way to be paid, hold their money, and pay bills. CBDCs could also decrease the maintenance a complex financial system requires, reduce cross-border transaction costs, and give people who use alternative money-transfer methods lower-cost options.” (Investopia.com)

 

And another helpful description of what a CBDC is meant to do:

 

“A CBDC is a digital form of fiat money (currency declared legal tender by government decree). Informally called a GovCoin, a CBDC or digital dollar is backed and regulated by a country’s central bank and serves as legal tender. A CBDC operates within a centralized system, meaning digital transactions would be secure and reliable. A Canadian CBDC would function exactly like cash, except you would also be able to use it for online purchases and send it electronically to other people and companies, including financial institutions and anywhere you pay your bills.” (MoneySense)

 

HOWEVER, it seems Canadians are not that interested in a “GovCoin”. In a recent survey by the CFA (Chartered Financial Analysts) Institute, they found only 38% of Canadians were in favour of digital currencies and only 34% said they would use a digital loonie. One reason is because Canadians already have a range of electronic payment options including debit/credit cards, e-transfer, pre-authorized payments, online bill payments and chequing accounts, and roughly 85% of financial transactions in the country are done digitally. Canada is in the top ranks of digitalized economies, apparently, so a “digital dollar” doesn’t seem to offer Canadians anything they don’t already have. The survey did note there were regional differences in the willingness to adopt CBDCs, with Global South economies generally more enthusiastic. This can be explained by the fact that on-line financial services in these countries are less established, and digital currencies are seen as a way of facilitating financial inclusion and low-cost payments schemes.

 

THE USE OF CASH is another important factor. In Canada 30% of financial transactions are done via cash. Interestingly, the total value of those transactions is only 15%. In other words, for less expensive purchases (chewing gum, condoms, lottery tickets) cash is the major player, while larger transactions tend to be done digitally. It should be noted that in 2009 cash use for all purchases was 54%. Since then, significant inroads have been made by digital services like “contactless purchases”, digital wallets, mobile payment apps, etc. further reducing the use of fiat money. It is predicted that by 2030 cash use in Canada is expected to be only 10% of total purchases. [Question: Will the fallout from the federal government's freezing of bank accounts during the 2021 Trucker protests slow the uptake of a digital loonie, and perhaps fuel protests against a cashless society? Ed.] 

CURRENTLY in the United States, one in five purchases are made with cash. Like Canada, people in the US make extensive use of debit/credit cards and other digital payment methods. However, in both countries, there remains little enthusiasm for CBDC currencies, and while 62% of Americans believe the United States will eventually become a cashless society, only 18% think that would be a good thing. In Canada that figure is somewhat higher at 32%.*   

 

SWEDEN leads the pack in the quest to go cashless with only 1% of all financial transactions done with cash and the country is set to go completely cashless in 2023! Swedish bank branches offering digital services exclusively⁺ are commonplace, with cash being dispensed and deposited at designated ATM locations. Another significant “friction” to the use of cash is a new law that limits the amount of cash someone can withdraw from their bank account at any one time. The law is supposed to fight organized crime, fraud, terrorism, etc.  In addition, the Swedish government has made it a requirement for anyone withdrawing cash above a certain amount to declare what the money is for. And a similar law is in place for cash deposits! (Scheesh! There goes the dark money I made at Fight Club!)

AS MENTIONED, there are fewer branches now dealing with cash. There are fewer bank branches period,¹ as well as the retirement of higher bill denominations to limit money hording. All these policies work to limit cash supply and arm-twist the population into eCommerce venues. [I want to be able to stuff my mattress with $500 bills; $100s are way too lumpy. Ed.]² 

 

“In general, the Nordic countries lead the way for cashless payments. Arguably, this is because Nordic populations have high trust in institutions, such as banks, and an openness to new digital technologies including amongst older generations.”

 

IN CANADA, the trend to close branches is not as pronounced as in Scandinavian countries or the US where over 10,000 bank branches shut their doors since 2019. But they seem to be closing here as well. A significant factor in branch-banking's demise is the  “ease and convenience” of mobile banking.

AND a very recent article from the ever-vigilant Reclaim the Net website, tells us that Australia is another country that is hellbent on going cashless. I guess we shouldn't be surprised, Oz has been a strange place for some time now. Recall the over-the-top clampdown measures the government  brought to bear on its citizens during Covid times. Something is broken in the land down under.  But, with respect to cashlessness: "Australia's top four banks have advanced this agenda by expunging over-the-counter cash withdrawals from most branches. Giddy-up and lickety-split!👍

 

“Australia’s choice to pioneer the first wave of this cashless future is a clever strategic move from the establishment. Capitalizing on the efficient enforcement of severe lock-down measures, the government seems ready to leverage the compliant temperament of Australians to pilot this currency overhaul.” (Reclaim the Net)

 

IN OTHER WORDS, we had better stay tuned to the happenings down under because as sure as the sun rises each morning what's learned during Australia's cashless experience will be lessons for us soon enough. Good on ya, mates!

FINALLY, in July, there was an interesting story of the "debanking" of British former MEP (Member of European Parliament) Nigel Farage, and it's instructive. Briefly: Farage, who campaigned tirelessly for Brexit a few years ago, was denied banking services--first at the upscale NatWest Bank where he had an account, then throughout Britain! Why? Farage went public with his plight and, taking legal action, he obtained a dossier giving the real reasons why he had become, in his words, a "non-person". (Denied banking services, he was denied the ability to function and make a living. He contemplated having to emigrate.)

 

THE COSY SWAMP of British banks  had banded together to support NatWest's original decision to oust Farage based solely on his reputation as a "right-wing" politician. He had done nothing illegal; they just didn't like his Brexit, pro-Britain politics. Long story short, NatWest's CEO had to resign and Farage kept his bank account. Point is: If they can do it to a high-profile public figure like Farage, they can do it all of us. And with a lot less effort.

Such institutions have the power to deny us cash as well as access to the financial services we depend on. And without cash, our subservience to our digital lords and ladies will be even more entrenched. 

 

SIDE NOTE: Since January 1, 2021, the Canadian $1, $2, $25, $500 and $1,000 bank notes are no longer considered legal tender.

 

ANOTHER important development in recent years is the rise of cryptocurrencies. Today there are dozens available to Canadians, with BitCoin and Ethereum among the largest and most traded. Cryptos are essentially private currencies (Monopoly money you can by stuff with) that are ‘owned’ by their users. More importantly, they are a form of electronic cash separate from fiat currencies and beyond the scrutiny of banks or governmental oversight.

 

DURING THE COVID YEARS, when governments around the world discovered they could monitor and control their populations to a degree considered impossible scant months earlier, the underlying architecture of cryptocurrencies, with their “blockchain” system of tamper-proof encoding of financial transactions accessible only with a personalized “key”, became a source of interest to authorities, as well as concern. Such technologies might conceivably be established on a country-wide scale, with citizens using blockchain-powered CBDCs instead of cash or the ramshackle digital architecture built previously to make and record financial transactions. In the past, governments were dismissive of 'crypto', whereas today several central banks are experimenting with variants of blockchain technology to test run CBDCs. For example:

 

“In late 2022, the Bank of International Settlements (BIS) and the Central Banks of Israel, Norway, and Sweden jointly launched Project Icebreaker. The project’s core rationale was to see how Central Bank Digital Currencies can facilitate cross-border payments.”

 

TO BE SUCCESSFUL, a CBDC must have ‘buy-ins’ from merchants and a critical mass of the general public, along with national institutions, trade groups, etc. If a digital central bank currency doesn’t facilitate trade, or profitability,  or fulfill retail and wholesale needs, be as convenient as established eCommerce platforms, or address privacy concerns, then introducing a CBDC will be met with resistance. The Bahamian "Sand Dollar", mentioned above, is used alongside cash and other digital commercial  venues, and is a case in point:  

 

“Sand Dollars account for less than one-tenth of one percent of the money in circulation in the Bahamas. The situation is similar in several of the handful of other countries that have issued CBDCs. In Nigeria, for example, the eNaira recently marked its one-year anniversary with the authorities so desperate to encourage its use that they offered drivers of three-wheeler taxis a five-percent bonus for taking it.” (cigionline.org)

 

THINK of a CBDC as ledger, one that records your bank deposits and withdrawals and in addition is able to access other ‘ledgers’—such as your purchases, expenditures, taxes, bills, loans, assets, property, all your financial information including their histories. For example, in purchasing a house, all the liens, assessments, mortgages, previous ownership details, repairs and maintenance, etc., could be at yours (and others)fingertips³ with blockchain technology (or other ledger systems, including ones currently in use, though perhaps with a little help from AI.) Such a scheme, if we continue down this rabbit hole, could link  previously separate or ‘siloed’ files into one seamless ‘chain’ of information. Your money, now digitalized, becomes information instantly retrievable about all your past transactions. And the more silos that are linked into such a system, means there is more information. About you.  "Digital loonies” might very well become a smile face stamped on the face of Big Brother.😀

AS MENTIONED, blockchain technology is not necessary to create a digital currency's ‘ledger system’, and not all recent trials of CBDCs use it, but governments might come to see (as many now already do see) cryptos and their blockchain technology as  rivals to fiat currencies and emergent CBDCs.

And that’s a problem. Crypto enthusiasts bravely assert their system is untouchable, but is it? Can’t governments just declare them illegal? Or environmentally unsustainable? Or black boxes where ill-gotten gains go to hide, etc.? If cryptocurrencies are in the way, governments, I feel, can readily take them out. Just pull the plug.

 

“But even with this forward-thinking behavior, the country’s central bank is not recommending bitcoin as an alternative to fiat, or government-backed currency, because it’s “far too resource-intensive, far too costly and most importantly, it doesn’t preserve stability,” Oystein Olsen, the governor of Norges Bank, told Bloomberg.”   (Make It)

 

IN OTHER WORDS, Norway's central bank is 'forward-thinking' in coming around to the idea that it (Norges) wants to be head honcho in any digital currency future. 

 

ANOTHER SPEED BUMP standing in the way of CBDCs is (as always) the great unwashed—the poor, elderly, infirm or mentally disordered, rural populations, transients, and so on—who can’t readily access internet or mobile services, and who would obviously have great difficulty living in a cashless society. Thus did the  Norwegian government recently express its concerns around the needs of the disenfranchised, assuring everyone that, yes, cash will be available,  all the while, they themselves act to limit the amount of bills in circulation and  to support the banks in their cashless agenda. Two-faced is a word that comes to mind (Or is that two words?)

ONE possible solution that's touted, other than going down the Soylent Green rabbit hole, is to pair CBDCs with a UBI (Universal Basic Income) program, so that a greater proportion of the poor could use the technology to meet their basic needs. I'm not sure how it would be set up⁴ , but such a concept would, to some extent, address the 'outlier' problem in a cashless society, and make for a greater buy-in from the disenfranchised and their supporters. Progressives on the left would get to feel progressive while not having to do, or sacrifice, anything, and bean-counters on the right would be thrilled that greater scrutiny and accountability is brought to bear on the profligate poor, using technologies like AI and/or blockchain that would come baked into any UBI/CBDC system. And oligarchs, government mandarins, and the managerial class would have markedly greater tools of social control and manipulation no matter how the master "ledger" system is designed.

 

To sum up: The WEF (World Economic Forum), the Davos billionaires' talk-shop, is naturally in favour of CBDCs. Anything to facilitate world domination, after all. Besides their usual Dr. Evil spin-meistering, guest speaker Eswar Prasad, outlined the potential benefits of such a system, but also warned that CBDCs' programmability could issue in a level of oversight and control unheard of before, with governments using digital currencies to shape social policies and behaviour  directly, by programming when and how and what someone spends their money on because  they would be able to monitor individual citizens "with microscopic precision." ("Hm? It says I can't buy condoms this month? Only gum. That's a lot of gum. Sugarless."  Sigh...)

 

"Oceania has always been at war with Eastasia." ("O'Brien", 1984. George Orwell)

 

ON THE POSITIVE side: CBDCs could integrate with other electronic payment systems, increasing efficiency affordability, and the speed of transactions. They could limit  activities like money laundering, tax evasion and other criminal activities. Digital currencies could be programmed to meet the needs of diverse populations, for example with better interest rates in one region or subsidies targeted to needy individuals in society. 

THE POTENTIAL DARK SIDE of course, is something we've already seen in the Trudeau government's over-reach during the Trucker Protests last year, freezing bank accounts and limiting free speech. Such practices would be orders of magnitude greater under a fully-fledged digital currency system, especially if it's combined with just a watered-down version of the Chinese Social Credit system . Worries around privacy and surveillance would escalate  unless there were rigorous controls and legal bulwarks built into any CBDC. However, in these increasingly intolerant and fractious times such guardrails are less likely to be enforced let alone put in place. And if they are installed, it's unlikely they will be built to last.

THERE'S MORE, but that's more than enough for now.  

Cheers, Jake.

_____________________________________

 

* On the other side of the scale: 79% of Indians think a cashless society would be a good thing, making that country the most gung-ho in the world for digital finance and payments systems, and CBDCs.  

 

+ Described euphemistically as creating “friction” in using cash for financial transactions i.e., to make using cash more difficult. Nice.

     
1. In the United States over 10,000 bank branches have been closed in the last four years. Covid and the pandemic lockdowns, and a sluggish (some say catatonic) economy are cited as the main reasons. If we use the rough and dirty comparison between Canada and the United States, with the US having 10x the population of Canada, then the equivalent number of bank branch closures in Canada would be 3,000 (i.e. 300 actual closures in Canada times ten), if our populations were equal, or roughly 1/3 of the US. 

Canada had 300 bank branch closures during the same period—a much smaller number and yet people noticed and were impacted by the closures and their access to cash and services. 

 

2. Norway’s not far behind with 3-5% point-of-sale transactions done with cash. [Hey! I just thought: How will we be able to bribe politicians if we can’t cram suitcases full of greenbacks anymore!?! Oh, woe is we! Ed.]

 

3. Problem is: the CBDC has the potential of becoming the 'curator' for all your financial data (for starters).  Ledgers that would normally be siloed might be available and 'on the books' with a centralized digital currency system like, for example, PayPal or Apple Pay, with their "just tap and go" (tap your phone, I guess? somehow). Then if you use a digital currency, I would suspect all those transactions would be digitally 'tagged' and curated. 

"Hey, guys! get a load of this! Look who ordered S&M for Dummies! Order# 6900xxx." ( Not me.) If all money in the future is digital, then money becomes information. Your information. 

AND TO SPREAD even more thickly the marmalade of dystopia, when if CBDCs merge their network with other networks along the line of China's "social credit system", then we can envision (darkly) a comprehensive, inter-locking web  of information on virtually everyone, perhaps powered by blockchain and AI technologies. For those in charge of such a system, what will they do with all that information? Digital information can be manipulated. It can be programmed. Perhaps programmed to shape behaviour: "I'm sorry Mr. Smith. This dispenser cannot issue you cigarettes. Your account says: 'Lung cancer, not sufficiently in remission. Purchase disallowed. Sugarless gum is currently on sale. Have a nice day.'

Anyway, I hope our betters learned to play nice in kindergarten, otherwise we're in for a bumpy ride.

 

4. Electrodes into the base of the skull? Pro forma lobotomies? Waterboarding? Rat cages? Just some ideas off the top of my head..or is that someone else's electrical signal disrupting my synapses? 

 

👉https://www.youtube.com/watch?v=u55U8C2-ep0&list=PLIr5N8bYgic0VdAcgbqri2a67YKvmaR8p&index=3       British comic Russell Brand presents a debit and credit analysis on the potential “cashless society” that may be in our future with his usual wit and sardonic humour. In his monologue, Canada receives a less-than-honorable mention:

 

"During the pandemic, when people said this [systems of lock-downs, censorship, freezing assets, internal passports] will be used as a kind of ‘piloting’ to introduce new social models and unprecedented levels of control, people said that was a “conspiracy theory”, that it was ridiculous. But haven’t you noticed how frequently since then you’ve seen measures introduced that would have been unthinkable in the pre-pandemic era. The idea that banks could control your finances to that degree would have been ridiculous in 2018 is now being piloted in Australia, probably because Australia was compliant [during the pandemic], tolerating internment camps, people being arrested because they weren’t wearing masks; people being arrested because they were saying the wrong thing. It seems countries that were previously regarded as bastions of liberal democracy, like Canada and Australia, [Italics mine. Ed.] are introducing authoritarian measures that would have been unthinkable just five years ago.” (YouTube podcast. August 19/2023.)

 

👉https://www.youtube.com/watch?v=NutPkRtU5Hg&list=PLIr5N8bYgic0Jy-4djcGhUVxs4Hnqw9F8&index=1&t=11s Retired American Colonel Douglas MacGregor gives an grim assessment of NATO’s future and the current status of the conflict in Ukraine, a conflict that, even now, the mainstream media barely reports honestly on: such as Ukraine’s fizzling “offensive”, Russia’s overwhelming military strength, the strength of the Russian economy, the corruption of the Zelensky regime, and the machinations of that feckless gang of scallywags and grifters masquerading as politicians in the Collective West, and who, still, lead us down the garden path (if we let them). (August 17/2023)

 

👉https://www.youtube.com/watch?v=AS44mvuo7Ow Journalist Danny Haiphong gives a thoughtful and articulate presentation to the UN Security Council discussing the grave missteps in American foreign policies and the cost of sending massive arrays of weaponry to Ukraine. (August 18/2023.)

 

 

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