The General Manager of the Bank for International Settlements (BIS) Agustín Carstens, has stated that Central Bank Digital Currency will grant authorities “absolute control” over money.

Bank for International Settlements general manager Agustín Carstens says Central Bank Digital Currency will give Central Banks “absolute control” over money. 

Agustín Carstens was Governor of the Bank of Mexico from 2010 to 2017. A member of the BIS Board from 2011 to 2017 and became General Manager of the BIS on the 1st December 2017.

In a recent speech he explains how he sees Central Bank Digital Currency working to benefit Central Banks in comparison to cash.

Carstens states: 

“For example in cash we don’t know who is using a $100 dollar bill today.”

“A key difference with CBDC is that a Central Bank will have absolute control on the rules and regulations that will determine the use of that Central Bank liability, and we will have the technology to enforce that. This makes a huge difference to what cash is”. 

What is the Bank for International Settlements? 

Based in Basel, Switzerland the BIS is the world’s oldest international financial organization.

The Bank of International Settlements (BIS) is owned by 63 central banks around the world and accounts for approximately 95% of world GDP. Its headquarters are in Basel, Switzerland, and it works in the area of monetary and financial stability. 

It serves as a bank for central banks. The BIS carries out its work through its meetings, programmes and through the Basel Process, hosting international groups pursuing global financial stability and facilitating their interaction. 

It also provides banking services, but only to central banks and other international organizations.

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What is Central Bank Digital Currency? 

So what is the difference between CBDC and cash? It’s all about control. 

Essentially CBDC can track every transaction easily.

Digital Currency, which is directly issued by a Central Bank to a consumer, is another way to essentially pursue their goal of getting rid of physical currency. 

Central Bank Digital Currency is also an easier way to control the whole payment system by being able to easily track each and every transaction. 

This Digital currency is also ‘programmable’, meaning the currency could in theory be programmed to give a negative interest rate if you save, restrict what you are able to purchase and automatically take tax payments. 

It is also a way for Central Banks to compete with the ever growing demand for cryptocurrency. 

“A central bank digital currency (CBDC) would use digital tokens and blockchain technology to represent a country’s official currency. Unlike decentralized cryptocurrency projects like Bitcoin, a CBDC would be centralized and regulated by a country’s monetary authority”. (www.investopedia.com). 

Central Bank Digital Currency absolute control of money
Image by Michael Schwarzenberger from Pixabay

General Manager of the Bank for International Settlements on Digital Currency. 

In a speech published on the BIS website Agustín Carstens states: 

“A technological revolution is changing our economy and even money itself.” 

He goes on to add: 

If digital currencies are needed, central banks should be the issuers and they should grant access based on identification.”

Central bank digital currencies (CBDCs) can combine novel digital technologies with the tried and trusted foundation of central banks. Developing CBDCs comes with a host of technological, legal and economic issues that warrant careful examination before issuance. Central banks – the guardians of stability – will proceed carefully, methodically and in line with their mandates. 

The BIS is supporting this international discussion, ensuring that central banks can continue learning from one another and can cooperate on key design issues.”

With obvious signs of inflation, huge unsustainable public and private debts and asset bubbles everywhere you look, does it seem like central banks are the ‘guardians of stability’? 

The war on cash. 

The ‘War on Cash’ as some people call it is nothing new, and many say this ‘war on cash’ has already been lost. 

Essentially governments around the world are trying to eliminate cash in order to make it easier to weaken or debase currencies to try and stimulate the economy. This is causing a “race to the bottom” in the value of fiat currency. 

Central Banks are also looking to push the trend towards the use of negative interest rates. 

With a ‘cashless society’, it makes it much harder for consumers to avoid negative interest rates, as you would not be able to withdraw physical cash. 

Physical currency is also more anonymous, it is hard for Central Banks and governments to track.

There is no certainty that cash would ever be banned.

However, there is now a strong possibility this could happen and cash holdings could eventually be extinct.

Read more about the war on cash here:

With Central Bank Digital Currency your financial privacy will be non-existent. 

CBDC would be able to track your whereabouts, your purchases, choice of restaurant, bar, entertainment and more, as well as sharing that information with police and tax authorities where necessary.

If every citizen has a CBDC wallet downloaded on their phone as an app, then a central bank and government can see every single transaction you will ever make, especially if there is no cash whatsoever. 

Essentially, every transaction would have to go through the central bank and government, this would give them an immense amount of power and control and could be seen as an attack on civil liberties.

Gold is private, gold can be stored outside of the banking system. 

People are now turning to precious metals as they no longer want to be controlled by central banks that are continuing to increase the fiat currency supply and, therefore, generate depreciation of money.

Physical gold is one of the very few truly private investments available today.

Gold is not controlled by a central entity or central governments. 

Gold can store your wealth outside of the banking system, therefore protecting your wealth from negative interest rates. 

Gold is a much more private form of preserving wealth. 

Conclusion. 

If citizens come to realise that the central bank policymakers will constantly dilute the purchasing power of the currency, then citizens could be more persuaded to move to other means of payment such as cryptocurrencies, and look to store wealth elsewhere in assets such as gold and silver. 

Could citizens simply reject Central Bank Digital Currencies? Time will tell. 

In the meantime you have the option to protect your wealth, privacy and purchasing power with physical gold and silver bullion. 

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goldandsilveruk is a precious metals enthusiast who wants to give authentic, clear, simple, transparent information and opinion to readers.