Could Central Bank Digital Currencies (aka programmable money), make you poor?
A sensationalist and alarming claim would be that the Bank of International Settlements (B.I.S), through a ‘unified ledger‘, is attempting to coordinate, through Central Banks, a plan of world domination. To really turn it up a notch, you could suggest it’s the next step towards a one-world currency like in the book of Revelation.
It’s a curious, yet creepy blend of Skynet, Blade Runner, and 1984 for seasoning.
CBDC’s are quite scary when portrayed in this light, but reality if often far more boring than this.
Still, let’s entertain the idea, after all, the facts of the case don’t mess up this dystopian narrative – not entirely.
Almost 98% of what the world produces (Global GDP) can now be captured by a Central Bank Digital Currency (CBDC). 134 countries & currency unions, representing 98% of global GDP, are exploring a CBDC. You can fact check that here. Large consultancy firms like Accenture have been involved with not only our very own RBNZ, but the US and India too.
Does Joe Bloggs care about this?
Do parliamentarians fully comprehend this in light of their duties to the public?
It’s concerning the general public doesn’t really care about this, but I don’t blame them – it’s complicated, boring, and there’s no real problem a CBDC can solve.
The free market’s ‘been there’ and ‘done that’ with respect to a type of currency that exists without traditional banks (ie crypto), so, what gives?
What’s the point of CBDC’s and are they good, bad, or ugly?
Here’s another advantage of a CBDC, while we’re at it. If the RBNZ were more ‘surgical’ with their monetary policy, they could target only the sectors of the economy that were producing the exact type of inflation they wanted to control. This could get scary if they abuse the power, but it’s welcome relief from the indiscriminate ‘carpet bombing’ approach we have now. Increasing the OCR (official cash rate) on everyone, means people lose their jobs.
Higher interest rates just for those pesky property moguls? Giddyup!
There’s good, and bad aspects of CBDC’s, but as per this report, there’s also potential for ugly.
No matter which way you slice it, Central Bank Digital Currencies (CBDC’s) could change the way we interact with our money in a significant way.
So, why are mainstream experts so quiet about this?
In last week’s episode of the Everyday Investor, I’m filling the gap by embarking on the first of a trilogy of episodes about changing money.
Last week I had this conversation with fellow financial adviser and CEO of Guardian Smith Mortgages, and co-host of the Keep The Change podcast – Mikey Smith. This week I’m speaking with sociologist Jodie Bruning on the topic too.
If you’re wondering… I’m devoting airtime to this topic, and will continue to do so, because I feel it’s really important.
Personally, I’m concerned most people will find this far too complex to care about, let alone understand.
But based on the facts alone, and not the narratives and sinister theories, CBDC’s could really change things, both for good and bad. When confronted with uncomfortable knowledge, it’s uncomfortable, and no one likes being uncomfortable! That’s no excuse when it comes to investing in my view.
Assessing all types of risk, including the risk you won’t be able to spend your wealth in the future, is part of your job when making investment decisions.
‘Should I be concerned about CBDC’s?’
If you’re suddenly concerned that 10 years ago you engaged in online hate speech, burnt polystyrene, ate too much red meat, and voted for the ‘wrong party’, then yes, you may wish to think about this deeply.
If you’re investing and planning for a secure retirement, a reasonable strategy is to account for all possible risks, and then stop worrying about things you can’t control.
Personally, this isn’t something I’d panic about, but that’s because my investment portfolio have already factored this in. This is something you should get financial advice on, before taking action. Let’s have a chat around how I can help you here.
If your interest is piqued, do your own research and start by critiquing this report, if you can.
Next week, I have a special guest tackling this from a completely different angle – you don’t want to miss that one!
