I am in favor of full individual freedoms. Therefore, if people want to use it, they must know about it themselves.
So what exactly is the point of having the digital euro
According to the BIS, it is especially beneficial for Central Banks and any data analysis:
– For every digital penny, who owned that penny can be registered. So you get full surveillance possibilities of the digital currency and all payments including the first owner of that coin or penny. Good for the ECB and potential officials who want to know. This may even require you to account for every penny.
– They get information about what every penny was used for, when it was used, and so on. In the reports they call it “At the moment we don’t know where the money goes, who owns it or what they buy with it” With CBDC they can.
– A WEF presentation mentions that more than 40% of shopping baskets are not verified because the user must log in, verify, confirm and pay. As a result, companies lose billions every year. CBDC in collaboration with Digital ID can solve this.
And another very important point that works very well for a Central Bank is direct changes in interest rates. With CBDC, central banks can immediately charge positive or negative interest on the Digital Euro. This is then the real-time interest. With the euro and the banks in the middle, this is much more difficult and it takes much longer before interest rate changes can be implemented. So with CBDC you can have 2% interest tomorrow and -2% the day after tomorrow. Therefore, “direct” interference in the economy.
And theoretically, but this is something I’m still exploring, it’s Inflation and Disinflation (not the same as deflation). I’ve been researching about Central Banks and Fractured Reserved Banks for over 10 years, so I dissected practically the entire idea behind FIAT. And unlike FIAT (then what Euro and USD are now) with CBDC it is much easier to “print” currency.
A little history to prove my point:
During the Breton Woods system before 1973, governments had to have a certain amount of gold in cash to back up their currencies. The US started printing more than it had gold so when countries found out they wanted their gold supplies back from the US they sent back their dollars. We stopped that because otherwise your economy would have collapsed. So we moved away from Breton Woods and now use the world reserve currency with the USD. (Which, by the way, is about to collapse as more and more countries are using the Chinese Yuan as a reserve currency and the BRICS countries are establishing their own gold standard.)
So to finally get to the point. Currency printing was legally very difficult during the gold standard. And if they wanted to do that, they would have to devalue the currencies. Now these days printing currency is also difficult because they have to have a certain amount of money in circulation. And more currency means loss of purchasing power, hence more expensive products.
With CBDC, coin printing theoretically becomes easy. So they can theoretically print 1 trillion Digital Euros at the touch of a button in bad times (inflation) and lend that to countries and get it back in good times (after repayment) (disinflation) without it having a direct impact on the economy or market. Because more euros on the run means loss of purchasing power, therefore more expensive products. But since all of this is done in an armored and digital way, the influence on us is much less because we won’t be aware of it. So this last point because we will not be aware of it because we will have a maximum of 3000 in our CBDC account. So because it can’t be more, we’ll have no idea how much they print.
To support that last point. Germany after World War I printed trillions of marks to pay off debts. So people got their hands on more money, big bills (1 trillion German marks) and that had a direct impact on the German economy. Because more landmarks entered circulation -> Inflation -> more expensive products -> Even more landmarks in circulation -> Hyperinflation -> even more expensive products. A cool story from that time is that of a woman who was walking down the street with a picnic basket full of marks and was mugged. The thieves left the marks behind and took the basket with them. Because the basket was worth more.
All of this is less likely to happen with CBDC. So they can create and spend as much money as they want.
Sorry for the full essay, but this is some of what CBDC is good for. Ultimately, it’s good for central banks, companies, and possibly politicians. But not for us as consumers.
I wrote a full essay (12 pages) about CBDCs on Linkedin some time ago. Based entirely on BIS, FED and Central Bank of Canada studies. But it didn’t take 24 hours for me to be called a Wappie by hundreds of people, threatened with death and accused of fake news. I even received pictures from my office. Then removed. It turns out that a lot of people want this and think it’s great was my conclusion. So if they want to use it, let them do it.
[Reactie gewijzigd door Snowfall op 29 juni 2023 00:15]