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An introduction to CBDC

(Central Bank Digital Currency)

Part II

Defining Central Bank Digital Currency

From the final Report for the Bank of Canada's Model X Challenge:
'Central Bank Digital Loonie: Canadian Cash for a New Global Economy'
February 11, 2021:

I include this passage, as much as anything, to give a sense of the almost impenetrable language you'll find in these documents. The second 'definition' is easier to read, and further explanations will make things clearer. There are only very short excerpts on the next page, so please continue undaunted.

'A CBDC is a digital representation of a fiat currency, hence a digital liability of the central bank (just like physical cash), denominated in an existing unit of account, which serves both as a medium of exchange and a store of value. Occasionally, CBDCs are devised as an "enhanced" version of cash in terms of universal accessibility and transaction capabilities, thus placed in between physical M0 cash and commercial bank money. Pursued goals vary according to the specific needs of the jurisdiction, as advanced economies generally rank their goals differently than emerging economies. Most existing CBDC plans envision improved payment efficiency (including new monetary policy transmission channels), financial inclusion, safety, privacy and compliance.' 

The second definition, from Goldman Sachs, as referenced in James Corbett's  'Your Guide to The Great Monetary Reset' :

'A central bank digital curreny (CBDC) is "a new form of money, issued digitally by the central bank and intended to serve as legal tender. From an accounting perspective, it is a third form of liability for the central bank, alongside cash and central bank reserves. Other design aspects of CBDCs may vary, One key distinction is between "wholesale" and "retail" CBDCs – the former are used only between central banks and financial institutions, while the latter is "digital cash" (M0) for use by households and businesses.' 

I must also include comments from various supranational organizations mentioned above, as they define that 'New Global Economy' the UofT/York paper mentions.

The international Monetary Fund (IMF) describes the 'challenge' to design this new economy, as being as monumental as the Bretton Woods Agreement in 1944, which defined the economy post-World War II world.


Yes, they really are comparing Covid-19 to World War II. That's complete nonsense, of course, but this has become a rationale to totally dismantle the current system, and introduce a new one. All bets are off as we try to 'Build back better' – with the plan that has been laid out. As Kristalina Georgieva, Managing Director of the IMF, tells us:

'We face, what I have called, as long ascent for the global economy. A climb that will be difficult, and even, uncertain and prone to set backs. But, it is a climb up, and we will have a chance to address some persistent problems: low productivity, slow grow, high inequalities, and looming climate crisis. We can do better than build back the pre-pandemic world; we can build forward to a world that is more resillient, sustainable and inclusive. We must seize this new Bretton Woods moment. . .'  (2:38 in the above mentioned video)

I must point to the inherent contradictions that exist in all of the material that is being rolled out by the IMF, WEF, UN and such-like organizations. While the UN, WEF and New Green Deal is telling us our 'footprint' on the planet should be minimized, the IMF and World Bank are promoting more growth. We'll return to this when I revisit my earlier piece on the NAFTA transportation Corridor and the United Nation's Agenda 2030, next time.


Continuing, with Christine Lagarde at the European Central Bank (ECB) – 'Winds of Change: the case for the new digital currency' :

"we are at a historic turning point. You, young or not-so young, it doesn't matter, but bold entrepreneurs. . . You are not just inventing new services, you are reinventing the history of money; you're drawing a completely new future. . .  A new wind is blowing, and it is that of digitalization. And in this new world, we meet anywhere, anytime. . . and, surprise, surprise, the town square is back, back on your smart phone. 


We exchange information, services, even emogies, instantly, peer to peer, person to person. We float through a world of information where data is the new gold, despite growing concerns about privacy, about cyber attacks, a world in which millennials are reinventing how our economy works, phone in hand. And this is key, money itself is changing. We expect it to become more convenient, more user-friendly, perhaps even less serious-looking. We expect it to be integrated with social media, readily available for online and person to person use, including micropayments. And of course, we expect it too be cheap, safe, protected against criminals and prying eyes.

Listening to this speech, I'm actually surprised Christine Lagarde's next job wasn't with a phone company. Referring back to my comments on 'the massive volumes of institutionalized crookedness': Criminal charges, apparently, mean nothing to the power elite, or the organizations they oversee. Following her conviction for fraud while at the IMF, Lagarde then went on the head up the European Central Bank. Read more:

Christine Lagarde: IMF chief convicted over payout

Convicted IMF Head Found Guilty of Negligence and Fraud 


Large corporations operate like criminal cartels today – fines for criminal activity in the pursuit of profit are simply the cost of doing business. The worst, not surprisingly, are big banks and big pharma. These are stories for another time, but I cannot let Lagarde's words pass without comment here.

It's almost impossible to know where to begin, as this is perhaps the most patronizing rationale for digital money yet. It's as if she's addressing a primary school audience: Exchanging 'emojis' somehow warrants mention, while there's no room in this Brave New World for such tedious things as 'serious-looking' money. As 'banks and telcos' together will be the operators of 'licensed validator nodes' in stage II of the CBDC plan (more later) the next generation, phone in hand, is going to reinvent money. . . Really


The system will be designed and rolled out by the banks and phone companies. Phone users are 'end users' (end users of phones and end users of money) and they will work inside the parameters of this newly created, high-tech  'box' to develop yet more apps for smartphone users.


The new fintech – always 'convenient' of course, 'user-friendly' and integrated with social media – will serve to entrench the new system. As I've said numerous times before, please, please, please, don't use your phone for banking. 


'Micropayments' are to become the norm (or 'New Normal') – like those ever shrinking royalties musicians earn for their efforts through spotify or itunes – in this new, dog-eat-dog, technology for technology's sake world. The owners and developers of the technology will continue to enrich themselves at the expense of everyone else – the creative class especially. Recently I recommend the book The Revenge of Analog: Real Things and Why They Matter – I feel as if I should give this work another plug now.

And returning for a moment to the subject of 'criminals and prying eyes' – while the elites and the organizations they run operate outside the law, they want to know everything about our lives (with the aim of taking a micropayment cut from every transaction we make). The thing they agonize over most – the thing that stands between them and 'absolute control' (as the head of the BIS puts it) - is good, old-fashioned, physical cash:

From Agustin Carstens, General Manager of Bank for international settlements (BIS):

"We tend to establish the equivalence with cash, and there is a huge difference there. For example, in cash, we don't know who is using a $100 bill today, we don't know who is 1000 peso bill today. The key difference with CBDC is the central bank will have absolute control of the rules and regulations that will determine the use of that expression of central bank liability and also we will have the technology to enforce it. . ."  

The emphasis here is mine. If you'd like to hear more commentary on this, please check out 'Your Guide to The Great Monetary Reset,' by James Corbett. (this statement at 27 mins)

Returning to the Bank of Canada's 'Model X' CBDC Challenge:


Three teams presented their vision for a Canadian version of CBDC; The Universities of Calgary, McGill, UofT/York. For this commentary, I am going to pass over the proposals of Calgary and McGill, as they do not meet the criteria we should be looking – given what was outlined in part I.

Adam Smith summed this up succinctly in a commentary on Calgary and McGill (to the monetary reform group) with: 'FAIL.' In response to this section from McGill presentation:

''[T]he proposed P-Hybrid CBDC aims to make it impossible (or more precisely, statistically close to impossible) to associate an individual with their purchases of coffee, groceries, alcohol, entertainment, medicine, etc. At the same time, we argue that there is little reason to protect the identity of the receivers of money.'  

Adam writes: 'Seems they're delving into the privacy aspect a little deeper, so far it seems a little better than the UCal. However, as I read further, I realize they intend the receiver to ALWAYS be ID'd, so you can't have any truly private transaction ever. Fail!' Of course, as the Bank of Canada's own primer on CBDCs, 'The Road to Digital Money,' states:

It [CBDC] could take many forms, but two broad approaches are

  • value-based—people transfer money from their bank account to a card or a phone app; or

  • account-based—people and businesses can open an account at the central bank.

Either way, payments made using a central bank digital currency could allow payments to remain

  • private to the parties involved, just like cash; but   

  • traceable to law enforcement, just like bank accounts.  

Anonymity does not exist in the world CBDCs, period.


As Christine Lagarde stated, 'we expect it [CBDC] to be cheap, safe, protected against criminals and prying eyes.' Except for the prying eyes within the system itself. Every transaction accept cash and coin (as the BIS also points out), would be visible to the authorities, and this might be fine, so long as the only actual anonymous 'expression' of central bank money – physical cash  – does not disappear.


So here we will look at the University of Toronto / York proposal for a Digtal Loonie - CBDL (as they refer to their concept). As you'll see, I've linked this proposal, and I'd be happy to highlight the important sections (contradictions and all), for anyone one who should be interested to dig deeper.

'Central Bank Digital Loonie: Canadian Cash for a New Global Economy.'

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