Some CBDC architects have eschewed reassuring assurances or ridiculous euphemisms in favor of blunt honesty. Ivan Zimin, director of the Department of Financial Technologies of the Bank of Russia, puts it this way: “Anonymity will definitely be incomplete, unlike cash, of which the digital ruble is an analogue.” The digital ruble will be on the platform of the Central bank issued and put into circulation. Each digital ruble has its own unique code that makes it possible to track its life cycle. For example, the government can verify that funds provided under government contracts, programs or subsidies are not being used for other purposes.”
Zimin’s compelling clarity brings us to the second unique feature of CBDC: centrally controlled traceability will open up many opportunities for a government to not only see, but also influence where this supposed “cash substitute” goes and how it is used. A closer look at Zimin’s statement reveals another important feature of the digital ruble – programmability. The ability to make CBDC “smart” is clearly present in all current implementations. The unique code of each digital ruble, a Russian bank said in its CBDC statement, “enables tracking and even programming of specific actions, similar to what cryptocurrencies can do.”
Visible and programmable: In Russia, each digital ruble will have its own unique code, explained Ivan Zimin, director of the Bank of Russia’s Department of Financial Technologies, “which will make it possible to track its life cycle”; It will also allow the Russian government to control how people and organizations use the currency.
This revelation appears to have caused some embarrassment. In April, the Bank of Russia published an FAQ (in Russian) about its digital token, in which it also debunked “myths about the digital ruble.” One of them was that “digital rubles can only be spent on a limited list of goods.” Nonsense, the bank claimed: “You can spend your digital rubles as you see fit.” But then Interfax reported in September (in Russian) that digital rubles would be marked so that they could only be used for certain purposes would be investigated by the Bank of Russia. “This opportunity will be considered in later stages of promoting the digital ruble,” Central Bank Deputy Chairman Alexey Zabotkin told reporters.
Ultimately, the debate over which CBDC design is the best and least risky is moot because such a design can be changed by the designer as long as the technology allows it. And that is the case, and the designer (i.e. the government) knows it and seems willing to change his mind as progress is made.
Is the Looney Tunes crowd right?
Centrally controlled traceability and programmability are the two advantages of CBDC define (contrary to the claimed) features. These could well have useful applications: reducing crime and tax evasion; Eliminate counterparty risk in commercial banks, which in turn would increase the security and stability of the financial system; Implement efficient policies bypassing intermediaries and targeting sectors or groups directly (e.g. parents with children); Manipulating currency value to address economic instability, stimulate growth, or support certain industries; or to introduce negative interest rates on cash holdings and thus reduce money in circulation.
Patrick Schueffel, writes in Digital Assets Journalprovides an excellent overview of these types of CBDC benefits in a happy utopian society under a wise, benevolent and altruistic government. Fabio Panetta, member of the Executive Board of the European Central Bank (ECB), which is also actively working on a digital euro, says: “Central bank money is a risk free Form of money guaranteed by the state: by its strength, its credibility, its authority.” (Emphasis added.) This is the basic premise of any argument for a fully traceable and programmable CBDC.
Happy utopia: CBDC is “a risk-free form of money guaranteed by the state – through its strength, its credibility, its authority,” claims Fabio Panetta, member of the Executive Board of the European Central Bank. (Photo source: Central Bank)
The problem is that throughout history it has been difficult to find a wise, benevolent and altruistic government. Recent examples of Western democratic governments enforcing political compliance by attacking dissidents’ bank accounts are a reminder of the current state of affairs (as also discussed in this current issue). C2Cessay). In fact, Schüffel also warns about a worrying number of other, not so welcome, CBDC “special purposes”: spending caps or bans on individuals or organizations; transfer limits; foreign exchange limits; capital export/purchase controls on foreign assets; consumption controls; punitive taxes; forced loans (e.g. the government arbitrarily borrowing money from you); nudge economics; geofencing; and enforcing the curfew (e.g. by imposing automatic fines for violations). These completely undemocratic and indeed tyrannical intentions should outrage any Westerner, but they fit China’s social credit system like a glove.
And those are just the dangers of abuse perfect Implementation scenario. But CBDC also risks destabilizing the financial system by disrupting fiscal transactions by commercial banks and undermining the established banking system, which could lead to a financial crisis. And like any other information system, CBDCs will be like catnip to hackers. CBDCs will be particularly vulnerable due to their centralized nature, which could lead to counterfeiting, theft or disruption of the entire financial system. With the participation of foreign governments in the “hackathon,” CBDCs become another front in the growing theater of “hybrid warfare,” taking such attacks to a whole new level of espionage and destabilizing the target country’s entire economy.
The paper from the British House of Commons Economic Affairs Committee: Central Bank Digital Currencies: A Solution in Search of a Problem? expressed many concerns about a retail CBDC. Among them: “What problem is a CBDC the answer to?”, “How can a CBDC be a competitive payment option without causing a level of disintermediation in the banking sector that would have negative consequences for lending and financial stability?”, “How can that?” A CBDC ensures strict data protection measures while meeting financial compliance requirements?” and “Which organizations can access sensitive CBDC payment data and for what purpose is this data used?”
Just this month, new evidence emerged that this troubling future is approaching. The European Parliament and the member states tentatively agreed on the establishment of an “EU Digital Identity Wallet”. It will initially be issued by member states on a voluntary basis and contains digital identification and personal information, from driving licenses and educational qualifications to medical records and banking information. The EU is touting it as giving people a secure way to prove their identity and exchange electronic documents with the tap of a smartphone icon. Robert Roos, a Dutch member of the European Parliament, quoted EU Commissioner Thierry Breton as saying: “Now that we have a digital identity wallet, we have to put something in it.” Roos helpfully explained: “What he meant is the digital euro, also known as CBDC,” and made it clear where the efforts are headed.
The full adoption of CBDC, especially if cash and “permissionless” cryptocurrencies were eliminated, would facilitate a system of digital surveillance and allow governments to enforce compliance with monetary incentives or penalties.
If the traceable and programmable nature of CBDC – plus its entanglement with other intrusive, privacy-destroying measures such as digital identification – is kept quiet, while instead virtuous but meaningless “financial inclusion” and questionable innovation motives are publicly promoted, then that is no surprise The Looney Tunes Crowd has come to this conclusion: Full adoption of CBDC, especially when accompanied by the elimination of cash and other alternative, trustless, permissionless, decentralized monetary systems such as cryptocurrencies, would close the loop on digital surveillance with built-in incentives /Penalties and AI-powered automation to ensure the “correct” behavior of citizens. Humanity would be faced with a dystopian future that neither Orwell nor Huxley could have imagined.
What about Canada?
In Ontario, most community centers have, annoyingly, become cashless. This was done under the pretext of the Covid-19 pandemic and was never reversed; Something similar has happened in other organizations and some private companies. Governments so concerned with “financial inclusion” appear to be busy creating inclusion gaps themselves. Who would bet that the Canadian e-dollar, once available, would be immediately made acceptable in these community centers and celebrated as a gap-filler?
Source : www.todayville.com