For years most of us have heard about an impending threat to do away with our monetary system as we know it. Yet perhaps because it sounds like end-time, apocalyptic doom and gloom stuff, it is easy to ignore.
Well, continue to ignore it – but at your own peril, because it might be implemented a lot sooner than any of us think.
Up until now our monetary system has been overseen by government authorities which print paper currencies and determine its value. This money, called fiat currency, is not backed by any commodity, such as gold. Its advantages include giving economic players greater control over the economy, as well as being easy and cheap to produce, and convenient to use.
But in recent days the monetary system has been misused and mishandled in such a seemingly deliberate way that it’s almost as if it’s been orchestrated cleverly to facilitate the establishment of a new system. For example, despite warnings by many experienced and savvy economists, the U.S. government chose to print too much money and gave massive handouts, factors which definitely contributed to high inflation and the current dismal economy.
According to Business Insider, “Fiat money is currency that’s backed by the public’s faith in the government or central bank that issued [it], but it has no intrinsic value, unlike commodity currency which is linked to the price of a commodity. Instead, fiat money derives its value from the trust people place in the government that issues it.”
Simultaneously, you might have noticed that there seems to be a push to no longer trust the present monetary system, which was one of the major reasons for the birth of cryptocurrency – a currency not based on a fiat monetary system. Crypto is not issued, controlled or backed by any government or bank. However, cryptocurrency has had its share of problems, the latest being the total collapse of the FTX Cryptocurrency Exchange, which has caused many investors to lose millions.
If fiat money and cryptocurrency are problematic, what’s the solution? Introducing Central Bank Digital Currency, known as CBDC – the digital form of fiat currency.
Rather than printing money, a central bank would issue electronic coins that are guaranteed and backed by the government. You’d be furnished with a digital wallet or bank account and directly interact with the central bank. Sounds great, right? But wait, there’s more!
What exactly is that “direct interaction”? The CBDC will be able to create a reliable profile of each individual based on their spending and saving habits. In other words, pretty much all of your transactions will be observed, noted and assessed. Then you will receive recommendations based upon your individual habits. While that might sound helpful, it’s also a major invasion of one’s financial privacy.
How long does anyone think it will take before personal monetary choices are evaluated as good or bad? And what will the consequences be if you are deemed to be making purchases seen as undesirable by your government? In other words, central banks will be able to take money out of people’s accounts to conduct monetary policy. The truth is, CBDCs are government’s attempt to protect its privileged position and to exert more control over people’s money.
All one needs to do is to take a look at the credit system China imposed upon its citizens – a system of rewards and punishments that accord with “moral ranking” by the Chinese Communist Party. Individual behavior can be monitored to determine who shares the government’s values and who doesn’t. And what determines a bad score? Anything from purchasing too many frivolities to being accused of sharing misinformation.
What happens to those who violate the terms? They can be banned from traveling, purchasing property or getting a loan. In China, “Once you’re in a low category, it makes [life] difficult. Such a system could further divide society, creating classes of people depending on their social credit.”
So much of this is reminiscent of the COVID-19 green pass, which, if you think about it, was also based on a social credit system. If you complied with the government directive of being vaccinated, you were able to take part fully in all that society offers – going to restaurants, traveling, being permitted into events and so on. Those who refused the vaccine were relegated to eating at home or remaining homebound entirely. Here in Israel, the government considered requiring the unvaccinated to identify themselves by wearing a colored bracelet just to obtain mall access – a plan quickly struck down due to public outcry.
There is no doubt that the CBDC will be presented as a much more effective way to safeguard your money. It will be touted as being in your best interest, and a way to make life less complicated. Of course, that’s how it has to be portrayed in order to convince people to leave a system they’ve used all their lives.
City.Journal.org warns that “Few likely paid much attention when, on March 9, U.S. President Joe Biden signed an executive order directing the government to begin developing a Central Bank Digital Currency to be issued by the Federal Reserve, alongside a framework to regulate private cryptocurrencies.” On Sept. 16, the Biden administration “released a framework outlining the regulation of digital assets including cryptocurrency and other items of value that exist only in digital form,” a framework which suggests the creation of a CBDC, according to Jim Probasco, writing for Investopedia.
City.Journal.org wrote in March that CBDCs have the potential to become an unprecedented totalitarian nightmare. Why? Again, we have only to compare it to what already exists in China: jaywalking, speeding or other infractions land citizens heavy fines – fines which can be deducted automatically by the centralized bank account.
Who will stop the government from deducting whatever else it wants from your account? Because, in effect, it’s a “joint account,” where access is available to your governmental benefactor. The options would be endless in terms of what could be moved from one account to another. And if the system is linked to desired standards and values, including many you don’t share, what happens to your financial outlook? Doesn’t this smack of programmed behavior or forcing a desired outcome? After all, being able to access your money is paramount. Controlling each person will be made simple.
We’ve already had a foreshadowing of this, when PayPal recently threatened to fine users who, by their standards, were guilty of spreading misinformation – a totally subjective parameter. They would only have to seize the funds accessible to them in your personal PayPal account. Or, what about the freezing of 280 personal bank accounts in Canada, during the Ottawa Freedom Convoy trucker protest in February?
The bottom line is that the CBDC has the frightening potential to curtail financial freedom, with the added bonus of making sure everyone is fully compliant with whatever we are being told to do. If you aren’t, losing access to your own money might be the consequence. In short, the new slogan could be, “My Money, If I Only Follow Your Demands!”
CBDC: What Will The Consequences Be If Israel Adopts the Central Bank Digital Currency? – part II
November 30, 2022
You might be surprised to learn that in June, the Bank of Israel shared details about its first set of technical trials for a central bank digital currency. CBDC One trial tested smart contracts, raising the issue of who should be allowed to write and police them.
In September, Israel teamed up with Norway and Sweden to explore the implementation of a centralized digital currency, engaging together to test technical systems through which this might work. The teams are expected to reveal their findings during the first quarter of 2023 as they relate to retail payments. So, the short answer is ‘yes.’ Israel is not only thinking about jumping on the CBDC bandwagon – along with 100 other countries exploring this direction – but already has begun to investigate and engage in trial enactments to determine its viability.
In fact, Israel began imagining the viability of CBDC as far back as 2017, conducting a pilot test in 2021, and already considering the possibility of calling the digital shekel currency “SHAKED” (the Hebrew acronym for Digital Shekel).
But as mentioned in Part I, there is no doubt that such a dramatic change in our monetary system would have to be preceded by a slick, enticing and attractive campaign to convince everyone that this is being done with their best interests in mind – taking into consideration their protection, benefit and convenience.
So, how predictable are the words of Bank of Israel’s CBDC project manager, Yoav Soffer, who claims that, “under the right conditions, the Digital Shekel could ‘allow for more freedom.’” He assures us that there is justification since, “It is in the public interest to fight the illicit black economy and tax evasion.” But when confronted with the warnings of critics who claim that CBDCs will monitor people’s spending habits and could have far-reaching political consequences for those who may not support the government, Soffer is quick to say, “Israel’s CBDC policy would be in the ‘public interest’ and subject to that country’s democratic processes.”
That abstract comment opens up a plethora of questions, such as:
- What happens if democracy, as we know it, changes into a more autocratic system under the control of one person? Does anyone remember that it was one person who made the exclusive deal between Israel and Pfizer, on behalf of the Israeli people, eventually to mandate the deal for all Israel’s citizens?
- What happens if digital banking requires a certain code of behavior and ethics by its citizens – one which might be unacceptable to many?
- What happens to your hard-earned funds for which you labored throughout your entire life? Do they become limited or are they even accessible without full compliance with the new digital monetary system?
- What happens if you belong to a group, or contribute to a group, seen as undesirable or unsupporting toward government actions? Will you be fined or penalized for your association with them? Will you be afforded a defense, or any type of democratic hearing, or will money be arbitrarily withdrawn from your account?
- Will you be obligated to comply with certain medical or social demands intended to prop up your standing or which, if you choose to opt out, will injure your ability to access your funds?
This leads to my next questions:
- Do Israelis have any right to privacy as it concerns the use of their own personal funds? If part of the function of a central bank digital currency is to track usage, and analyze spending habits to determine their legitimacy and worthiness, whose money is it ultimately? The moment your spending choices come under question, it has ceased to be solely your money.
- Given the fact that Israel boasts the most ethical army in the world, as well as being one of the few countries to swiftly offer humanitarian help to any country that needs and desires it, why would we decide to join a global banking system which intends to spy on the spending habits of its citizens, as well as be the judge and jury as to how we might conduct ourselves concerning our life choices?
For now, Israel has not spoken much about the possibility of launching a digital currency, but the Bank of Israel continues to research and be active in its development and planning. However, given its claim that the digital shekel “will not pose a threat to the national financial system,” it might not be too long before CBDC is widely introduced to the Israeli public as a fait accompli.
Lastly, it should be noted that “blockchain,” the technology under which cryptocurrencies operate, will serve as the basis for a central bank digital currency. Blockchain is defined as “a technology which allows assets to be exchanged electronically, recording the facts and details of a transaction without the ability to make any changes to those records later. It is information recorded in a distributed ledge with identifiers for the sender, recipient, time and transfer amount. In effect, it is an unbroken sequence of blocks, so that anyone can track the entire transaction history of a particular asset, all the way back to its origin.”
Try digesting that definition for a few minutes!
It might be the best and most convincing argument as to why CBDC is likely to turn into giant government overreach into personal wealth, giving it the capacity to become the ultimate puppet master when it comes to making people do whatever it is that it demands from them. Seize their money, and now you own them. Whether they eat, pay their bills or are allowed to participate in life is now in the hands of the ones who can see their payment history and determine if they get a passing grade.
So why should that threaten anyone? Just a reminder to Israel . . . in the words of one of our own prophets, Micah 6:8, “The LORD has told you what is good, and this is what He requires of you: to do what is right, to love mercy and to walk humbly with your God.” Israel needs to think carefully as to whether CBDC can be enacted and, at the same time, allow us to follow the wise counsel given to God’s chosen people!
Cookie Schwaeber-Issan A former Jerusalem elementary and middle-school principal and the granddaughter of European Jews who arrived in the US before the Holocaust. Making Aliyah in 1993, she is retired and now lives in the center of the country with her husband.