9.3
8.521 reviews
English
EN
Central banks want to use digital central bank money to offer an alternative to cryptocurrencies and innovations from fintech companies. But is that really desirable? What are the pros and cons of this new form of money? In this conversation at Blckbx Paul Buitink and Ancilla van der Leest talk about fundamental changes in our money system. Not only about central bank digital money, but also about negative interest rates and the disappearance of cash. What does this mean for our freedom?
Since the corona crisis, banknotes have been used less and less in daily payments, but the number of banknotes in circulation has increased sharply since then. We've talked about this before on Holland Gold written. Due to negative interest rates and increasing financial repression, more people are using cash as an alternative means of savings. Cryptocurrencies and precious metals are also increasingly being used for this purpose.
According to Buitink, there are two sides to the disappearance of cash. On the one hand, it is a logical development, because people want to pay more and more digitally. There are also good reasons for entrepreneurs to stop accepting cash. Consider, for example, additional costs and the safety risk it entails. From that point of view, it is understandable that governments and banks discourage the use of cash, but what people do not sufficiently consider is that far-reaching digitization and centralization of our money and the payment system entails other risks.
This brings Buitink to the subject of digital central bank money, a new form of money that gives central banks more control over the payment system. He warns of a number of properties of central bank digital money that central banks can use to control people's behaviour.
At the moment, only wealthy savers are confronted with negative interest rates. One of the reasons why banks do not yet pass on negative interest rates to all savers is that they risk people withdrawing money from the bank en masse. As long as cash remains available as an escape route, this is a real danger. In a world where central bank digital money is taking over the role of cash, there is no longer any possibility to flee into cash. Central banks can therefore charge negative interest rates for central bank digital money.
Another risk of central bank digital money is that it gives central banks the ability to control people's spending habits. In the United Kingdom, the idea has already been expressed of programming social benefits in such a way that people can only spend them on certain products. Central banks could also assign an expiration date to the money. That would mean that people would have to spend the money within a certain time frame. This restricts people's freedom to decide for themselves what to do with their money.
Since the credit crisis of 2008, we have been living in a world where banks cannot fail. As long as things are going well, banks make a profit from their privilege to put money into circulation. If things go wrong, the taxpayer is the guarantor. At the same time, it does not appear to be possible to set up a kind of deposit bank without having to contribute to the deposit guarantee scheme. Due to the lack of competition, banks feel little urgency to improve their systems.
In that respect, both central bank digital money and cryptocurrencies could shake up the money system, according to Buitink. These alternatives can cause banks to innovate more to make their payment systems faster and cheaper. However, the question is whether consumers are better off with central bank digital money, given the objections mentioned above. Cryptocurrencies and gold can then offer an alternative, over which governments and banks can exercise little control.
Finally, Buitink points to the plans for a European Register of Assets, in which people have to give up all their possessions. Including virtual currencies, art, real estate, and precious metals. This means even more control and loss of freedom. Last summer we wrote about it on Holland Gold , but it received little attention in the mainstream media.
Clickthis link or on the image below to watch the full video on Blackbox's website.
Digital Euro, salvation or pitfall? Ancilla speaks business economist Paul Buitink
This contribution was made from Geotrendlines
