CBDC – Faster Than You May Expect

Recently this blog warned of persecution coming via Central Bank Digital Currency (CBDC).  This will make the Respect for Marriage Act look like protection of religious liberties. . . which it is NOT!  In a previous blog I noted how President Biden authorized any and all government agencies with a vested interest in a CBDC to explore the actions required to launch a United States CBDC if doing so is deemed to be in the national interest.”

When did a government ever invent a program that it then dumped?  Just search for “obsolete federal programs still on the books” in a search engine and watch the boondoggles your computer will find!

So now, just eight months after executive order 14607 was signed, the NY Federal Reserve is rolling out a test of these actions.  “The Federal Reserve Bank of New York and major banks will launch a three-month test of a digital dollar in hopes of studying its feasibility.”  (The Washington Examiner)

“Citigroup, HSBC Holdings, Mastercard, Wells Fargo, [BNY Mellon, PNC Bank, TD Bank, Truist, and U.S. Bank] are the [nine] financial companies participating in the experiment alongside the New York Fed’s Innovation Center, they said in a statement. The project, which is called the regulated liability network, will be conducted in a test environment and use simulated data, the New York Fed said.”  (Reuters)

The U.S. dollar will be represented as tokens and transactions will be settled through simulated central bank reserves on a shared multi-entity distributed ledger.  This pilot will be conducted in a test environment and the participating parties have stressed that this experiment is not intended to advance any specific policy outcome or hint that the Fed is planning to make any big decisions about a central bank digital currency in the near future.  😉 Wink, wink, “I’m from the government and I’m here to help.” 😨 (Ronald Reagan)

As noted, the US is behind the curve of other countries, so much so that there is discussion about whether the dollar is becoming less important in international transactions.  If we fall behind advancing nations like China, India and …Jamaica (??😳) the dollar will lose its slot as the world’s reserve currency!  The rise of the Euro and China’s Yuan increasing presence in the global economy all feed into this idea.

China has tested its digital yuan in several provinces, and the currency is even available to users on the popular app WeChat.  It recently added four provinces to its list of regions for the CBDC trial.  Nigeria also launched a digital currency, the eNaira.  The governor of Nigeria’s Central Bank said it was responsible for more than $9,000,000 (in USD millions) in transactions in the past month.  Earlier this month, France, Switzerland, and Singapore jointly conducted a trial for their digital currencies, one of the first of its kind.  These cross-border trials are also an important agenda item in CBDC development as one of CBDC’s promises is to expedite international trade between financial agencies.

A news release referred to the experiment as a “proof-of-concept project” in which the largest banks in America will work with the Fed’s New York Innovation Center to simulate digital money representing the deposits of their own customers and settle them through simulated Fed reserves on a distributed ledger.

Of course, this is all for our own good: Safety, Security, Convenience!  Those are the three catch words that will be used to draw us in.  If you know you are not a bad person, but you enjoy convenience, it will be tempting to say to yourself, “I have nothing to hide.”  Are you living a “sustainable lifestyle” and helping to fight alleged climate change?  Do you support government views on race, abortion, marriage and even democracy?  Are you a team player?  If not, your participation in society may be affected.  Although financial institutions claim a digital dollar boosts speed and convenience, the real motives are surveillance and control.

This is exactly how the recent vaccines were rolled out, through coercive policies enforced, not just by governments but by their corporate partners.  John Kerry, at the COP27 conference in Egypt said that this is the model that can be used to enforce compliance with the sustainability agenda being pushed by the United Nations and its myriad partners in the private sector, headed by the World Economic Forum.

Once digital programable money is in place, you may not get to spend your money on certain things and may be limited to certain areas of commerce.  A digital ID will be required for everything!  Eventually, you will not be able to access any government or public services without that digital ID; you will not be able travel across national borders nor access healthcare nor the internet.  You will be required to prove your identity through a digital program containing your unique biometric markers, a thumb print or a facial scan.  Cellphones are already prodding us for this information.  Many new driver’s licenses require biometric markers.  Your face will be linked to a new digital CBDC account.  Without it, you will be locked out of the system – no job, no healthcare, no social security check, no buying or selling . . . nothing.

The World Economic Forum wants to achieve this by 2030.  After digital money backed by government is in place, cash can be all together eliminated.  In June 2020, many world leaders gathered to announce the launch of a plan to “reset” the entire global economy, a proposal ominously named the “Great Reset.”  Among the elites from around the world and powerful institutions that pledged their support for the Great Reset were the International Monetary Fund, the secretary-general of the United Nations, Prince Charles and CEOs from major international corporations.  A frequent mantra of The Great Reset is “equality of outcomes,” a concept foreign to democratic “equality of opportunities.”

“Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed. …In short, we need a ‘Great Reset’ of capitalism. Klaus Schwab, the founder and executive chairman of the World Economic Forum, wrote.

New York Fed Announces Phase I Results of the New York Innovation Center’s Project Cedar – FEDERAL RESERVE BANK of NEW YORK

“The U.S. Federal Reserve has tightened the window for the launch of its FEDNOW instant payments platform to between May and July of 2023.  According to a press release, FedNow will be open to financial institutions of any size, allowing them to facilitate instant payments for consumers and businesses, giving customers immediate full access to funds. The platform is currently in pilot phase with more than 120 organizations participating, including lender U.S. Bank and payment processor Alacriti Payments among them.”  (Forbes)

Some people herald crypto-currency as the money of the future.  Its blockchain accounting system made it attractive to investors who valued privacy and speed of transaction.  Libertarians liked its independence from government or banks and saw it as a parallel system that would eventually replace modern monies.  But the joke’s on those who thought the privacy and independence from government were its salient features.  It will soon be Big Brother, more pervasive and intrusive than George Orwell ever imagined.

Once CBDC becomes the medium of exchange in our nation, China and others, it will be a short hop to a global cabal who will control our finances; one more step toward a global government.  All it will take will be a cataclysmic event more astounding than the recent pandemic, and One Man will come along with the rest of the solutions.  As Jesus warned His followers, do not “get ready.”  Rather, BE READY!  Christ-followers have nothing to fear, For as the lightning comes from the east and shines as far as the west, so will be the coming of the Son of Man. Wherever the corpse is, there the vultures will gather.” (Matthew 24:27-18)

In Our Lifetime – Digital Money Wars

Money 2If, like me, you believe in an approaching end of history as we have known it, you will find the attached article interesting to say the least.  If you believe the end of history involves a return of Jesus, called the Christ or the Son of God, the coming change in the way money is ‘manufactured,’ distributed and controlled and the issues raised in the article are a portend of the shape of the world at its end.

Even if you do not believe in Jesus as a Messiah nor in his literal return, the article bears careful reading as the change in currency and the way money is regulated will affect us all.  This is not an issue of, “If,” but rather, “How soon?”

Consider that on June 28, 1914, a 19-year-old Serbian nationalist shot and killed the Austrian Archduke Franz Ferdinand and his wife at point-blank range. Austria-Hungary was furious and with Germany’s support, declared war on Serbia, initiating The Great War, which we now call WWI.

When British Prime Minister showed a copy of a treaty with Hitler and declared, “Peace in our time,” in September 1938, he was only six months out from Germany’s breach of the treaty that propelled the Europe into its second World War.

The USA, deferring to isolationists in our country, stayed out to the war until a fateful morning raid on on December 7, 1941, by the Japanese air force that blasted Pearl Harbor into the ocean.  By the end of the day, in an era before the internet, US government officials had gathered and on the next day declared war.

Life changed for millions of people overnight on November 9, 1989, with the “fall of the Berlin wall.”  America responded immediately to the invasion of our county by radical terrorists on September 11, 2001, such that “9/11” is as emblazoned in our vocabulary as “Remember the Alamo” was in the minds of the people of 1836.

Instant information is accessible 24/7/365 and the shift from cash to digital currency will probably be as swift or faster than any of these listed previous events in history.  How soon after will a “mark” be required to buy or sell?  What will be the nature of said “mark?”  A biometric identifier?  An implanted chip?

We should not make predictions of end time events before they happen, as we who are Christ-followers are not prone to sensationalism or panic, and too much ink and attention has been given in times past to attempts to identify the “other-Christ” who will lead most of the world in rebellion against The God Who Is There.

However, it is hard to imagine a better presage to the Second Coming of the Christ than what will happen to the nature of currency in our lifetime.

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Brace for the Digital-Money Wars

Digitizing the Chinese yuan—and eventually the dollar—would open new fronts in the fight over privacy and trade.

  Illustration: Mikel Jaso
THE NOT-TOO-DISTANT FUTURE — The National Security Council holds an emergency meeting. North Korea has launched a missile, capable of carrying a nuclear warhead within range of U.S. forces in Guam. At this rate, North Korea could land a nuke on the U.S. mainland in less than a year.

The shocking advance in capability despite heavy trade sanctions is due to a stream of money that the U.S. and its allies cannot monitor — a cryptocurrency. But it is not one of the risky ones celebrated by overnight millionaires and largely avoided by serious investors, it is a new one, with the stamp of legitimacy: the digital yuan.

The scenario above is fiction, but it is not fantasy. If China digitizes its currency, as it plans to do, and the North Koreans use it to finance their missile program, it is a flow of money that circumvents U.S. sanctions. That would force the U.S. to grapple with its own now-antiquated currency. If the U.S. follows suit, digitizing the dollar in order to maintain its global economic dominance, it would also find itself in possession of a potentially powerful surveillance tool.

While bitcoin, the first successful cryptocurrency, was created to maintain anonymity in transactions, future digital currencies will be the opposite of anonymous.

And just as every transaction involving a digital yuan would be trackable by China, every digital dollar changing hands would be visible to the U.S., its issuing government. Banks might still manage the flow of money, but they will no longer be the record-keepers they once were.

“The fundamental nature of money is really changing,” said Neha Narula, the director of MIT Media Lab’s Digital Currency Initiative.

Dr. Narula played the president’s “cyber czar” in an enactment of the hypothetical North Korea scenario staged last month at Harvard’s Kennedy School. “Digital Currency Wars” also featured former Treasury Secretary Lawrence Summers as well as Ash Carter and Gary Gensler, all of whom have served in presidential administrations.

We are moving rapidly into a new monetary era. Countries and companies are looking at digital money as the new standard for their monetary systems and a replacement for actual cash.

Some of the benefits include faster, cheaper payments, a greater ability to root out money launderers, and a more open, inclusive financial system. Digital money is also going to provide new abilities to law enforcement and governments that will almost certainly open up another front in the fight over privacy.

“Privacy is one of the defining problems of our times,” said Emin Gün Sirer, chief executive of blockchain-based startup Ava Labs and a professor of computer science at Cornell University, and it will be with money, too. In practice, he said, it is almost impossible to create a form of digital money that doesn’t identify its users.

What we think of as “money” is actually an extraordinarily complex network of thousands of commercial banks and central banks. The system works but is costly and relatively inefficient because everybody is working off their own balance sheets. Digital money would create a system where everybody using a particular currency is working off the same balance sheet.

The idea of bitcoin, unveiled 11 years ago, was to compress the cumbersome functions of the modern financial system to enable money to move anywhere around the world, in minutes, for virtually no cost. If you have ever tried to send even $10 across a border, you can appreciate the allure in this.

But bitcoin was just Act One. Act Two began this summer, when Facebook uncovered its proposed cryptocurrency, libra. This wasn’t some loose confederation of cypher-punks and anti-bankers. Suddenly, one of the world’s biggest, most powerful (and most controversial) companies was saying it was going to make money.

A flurry of action followed. The U.S. Congress convened hearings and wrote bills to stop libra from launching. Regulators leaned on some of its original supporters to back out. The Bank of England’s Mark Carney suggested an international cryptocurrency should replace the dollar as the world’s new reserve currency. The Chinese went further. They took their own efforts into overdrive and are widely expected to launch a digital version of the yuan in the coming months.

“This is more than just Venmo, more than just PayPal,” said Aditi Kumar, executive director of Harvard’s Belfer Center for Science and International Affairs, and playwright of “Digital Currency Wars.” “This is an entirely new way for countries to operate in the world,” she added. “It will make one or two actors all-powerful in the monetary system.”

The digital yuan China is planning is in fact a complete inversion of the bitcoin model. All of the data created would be centrally housed and become part of China’s surveillance state.

Money has always been a powerful, blunt instrument. It is an imposition not just of will, but of values. After World War II, the dollar became the foundation of the international monetary system. That gave the U.S. government a special tool. The U.S. has used its control over the dollar-based finance system to impose sanctions such as the ones on North Korea.

As the U.S. share of the global economy shrinks and that of countries like China and India expand, countries are actively seeking alternatives to the dollar.

In the fictional North Korea missile crisis, China would be tacitly allowing the financing of Pyongyang’s nuclear program to go through, because the government would be able to see where each digital yuan goes. That is an extreme, and entirely hypothetical scenario, of course, but it is an example of the leverage China would have over every transaction on its system. The only question is how heavy-handed the Chinese would be in using it.

While the Chinese model might be the far end of the spectrum, cryptocurrency has been moving in that direction. While bitcoin was designed to mimic the anonymity of cash in a digital setting, all its transactions are public, and therefore trackable. And Facebook’s libra would log transaction data, while recording user identities in a separate database. A central concern in Congress is what Facebook would do with that information.

Say the Federal Reserve digitized the U.S. currency. It could track how every dollar in circulation is spent. That might give it a great advantage in trying to figure out how the economy is growing, and where stimulus efforts would best be directed. But say people in government wanted to lock down some group or activity. They could do that, too. The role of banks would likely change considerably as well, though whether they gain or lose with a digital dollar would depend on how the government issued it.

Whether the U.S. will feel pressure to shift to digital still is not clear. There are proponents and opponents of cryptocurrencies in Congress. The Fed has examined the idea of creating a digital dollar, but that is all it has done.

At Harvard, Mr. Summers and his fellow stage actors spent some time debating this point. Some felt the U.S. should get in the game, others believed all they needed to do was make improvements to the existing system.

People need to start thinking about this now, Harvard’s Ms. Kumar said. China’s digital yuan will be a real-world proof of concept. The West will need to respond in some way. “Are we prepared for that?” she said. “Not just technically, but legally? Can we protect privacy in this new world?”

Write to Paul Vigna at paul.vigna@wsj.com