Central Bank Digital Currencies On the Way

Mish

Six countries have digital currency pilot programs in place. Canada is in development mode while the US lags.

The Central Bank Digital Currency Tracker shows the evolution towards central bank sponsored digital currencies.

Nearly 80% of central banks are engaged in work related to national digital currencies, according to a 2020 Bank of International Settlements survey.

Last month, China announced a pilot project of its digital Yuan in four cities. This month, the US is considering implementing a digital dollar. 

Country Specifics

Evolution of Central Bank Digital Currencies2

Digital Currencies are Coming

There are advantages to digital currencies especially in terms of payments.

But the push for digital currencies is also nefarious. Once cash is banned, governments can and will track every penny of every person 100% of the time. 

And I  do expect a ban on cash, starting with Sweden.

Once in place, digital currencies open up new avenues of control especially in regards to negative interest rates and wealth taxes.

Mish 

Comments (58)
No. 1-24
Realist
Realist

Digital currencies are Inevitable.

I see the UK issued bonds with an effective negative rate today, joining the ranks of negativity. It didn’t take long, once Mark Carney retired.

Bam_Man
Bam_Man

Only a matter of time.

New make-believe "money" to replace the old, printed-to-infinity-soon-to-be-worthless, make-believe "money". But it's "digital" and "crypto". So cool and modern (as in MMT)!

Will the rubes fall for this?

Probably.

Sunriver
Sunriver

Capital Controls will be easy to implement, whenever "deemed' necessary, with digital currencies. Humans are innately analog not digital; but have been 'trained' to despise physical currencies. Long Live Gold! Lest we become slaves to the central bankers madness.

thimk
thimk

Hell we are already pretty much "digital" already . But go completely digital and there will be no "underground economy"

Misc
Misc

The map needs updating as Venezuela has already launched its digital currency. I haven't heard how it's been going for them, but with the decline in oil prices and loss of faith in the government, I don't expect much.

channelstuffing
channelstuffing

Could Covid nonsense cover for something much more sinister?Removal of all paper currency that way big govt/central banks have total control of what and where you spend money!And they'll take what they want,and throw a few crumbs your way like that $1200 handout while they pump trillions into wall street and the big banks!

TimeToTest
TimeToTest

It’s a double edged sword with blockchain type currency’s. They can be tracked. But the that’s everyones problem. The people may not have the power to see everything but the evidence is there to be revealed at some point.

It could bring accountability at some point.

Zardoz
Zardoz

Sounds like a colossal waste of energy.

caradoc-again
caradoc-again

Financial Repression will be the order of the day for years.
It will probably require some form of capital controls.
Digital currencies = perfect for the role.

It's a done deal in my opinion for that reason alone, when not if.

2nd and 3rd order impacts will occur, even in value of PMs. May not be PM positive in med-long term as there could be conversion ratios if PMs converted to necessary currency needed to buy/sell.

All power will be with Big Brother running the digital system.

Sechel
Sechel

Yea digital currencies are coming which is bad news to drug dealers, those engaged in organized crime and anyone else seeking to avoid paying their taxes. Will also save the government money is the printing of new money and destruction of old bills

Blurtman
Blurtman

I've got digital currency already - debit and credit cards. No cash required. Also wire transfers. This seems to be a non-story unless physical currency was to be done away with.

ReadyKilowatt
ReadyKilowatt

Great news if you're a telecom company. Now not only will you need to have all the electronic paraphernalia needed to maintain a wallet (although technically a QR code on a sheet of paper could suffice), you'll also need to have a network connection.

WhirledPeas
WhirledPeas

This is the path to total government control of our lives. If the government does not like something Mish has to say, they just block his account and no one will be able to send him money. You give this kind of power to someone like Hitler, Stalin, Lenin, Mao Tse-tung or Pol Pot, the consequences would be unimaginable, especially if we have a global government.

Six000mileyear
Six000mileyear

Cyber attacks have been known to wipe out accounts. Digital currencies will guarantee a system-wide failure sooner than later. Who needs a standing army when a couple of hackers can shut down an entire country's financial system?

Tony Bennett
Tony Bennett

"But the push for digital currencies is also nefarious. Governments can and will track every penny of every person 100% of the time. "

...

Zero doubt Big Government heading in this direction as it benefits Big Business. Big business already operates in "digital sphere" concerning income statement. Many small marginal businesses, however, survive by skim (cheating on taxes) ... a push to digital would put some out of business ... and their "surviving" customers / clients migrate to Big Business.

MoatleyFool
MoatleyFool

How will this affect digital payment processors like V and MA? Govt backed digital currency likely will have security at least as good as V and MA probably would be without any transaction fees...

Webej
Webej

Once you have digital currency, using cash will have the aura of illegality, only suited for transactions involving drugs or sex or something shady.

The idea of being able to force people in the informal economy to pay income, transaction, and payroll taxes seems a great idea, until you stop and think why people are ready to take the risks of not doing these things in the formal economy: In most cases you will not be collecting more taxes, you will be killing off this activity, since it is no longer profitable. Less freedom always translates to less activity and less initiative.

Mish
Mish

Editor

"Once you have digital currency, using cash will have the aura of illegality, only suited for transactions involving drugs or sex or something shady."

Cash will be banned - period
I expect Sweden will be first

RonJ
RonJ

"But the push for digital currencies is also nefarious."

That's the reason they are doing it.

When you get a paycheck and it is deposited in the bank, it is the bank's money. With a digital currency and no cash, you can no longer own the profit from your own labor.

oxen324
oxen324

I think digital currencies will make it easier to launder money. Bankers won't have to explain where all that pesky paper came from. Humans are very inventive and where there's a will there's a way.

wors
wors

On a country basis, is there a correlation between a certain virus and central digital currency?

eugenioca
eugenioca

I've always read this valuable blog in order to obtain financial advice. I think Mish is right, becouse even me is able to connect the dots. What I would hear is a path to survive in this scenario. There are most doctors able to diagnose... but nobody knows anything about the cure