A belated reply to this, but eight days after you published this, the Bank of England produced a lengthy 'consultation' , due to close in eight days' time, on the 'key features of a potential model' CBDC, not on whether a CBDC is needed or wanted. It's worth reading if you have the time and inclination, but I'm sure that nothing in it will surprise you. It's ironic that the supposed 'case' for a CBDC is partly based on the numerous forms of electronic payment that are currently available, when they should actually deem CBDC to be superfluous.
My guess as to how CBDC will be implemented is via mortgages and business loans. With base rates now gradually being raised to pre-crash levels (the BoE base rate is currently 4.75% and expected to rise to 5.5%), anyone holding a large amount of debt is in a vulnerable position. In the UK most first-time-buyers get lured into the housing market with a low-interest fixed rate mortgage lasting two or three years, whereupon they will then seek the best deal available, which could just last another two or three years; and so on. It could be that a CBDC loan is the only one available. It would prevent them from withdrawing equity if needed, though it is unlikely that many would want to risk doing so if rising interest rates mean that property prices take a downturn. A CBDC mortgage would also groom those mortgagees to accept CBDC as normal for use in other circumstances.
One other possible area that CBDC could be introduced is if you are lucky enough to get a tax rebate, in the UK from HMRC, in the US I guess that it is from the IRS. That rebate could be time-limited and expire after, let's say, six months if it hasn't been spent. Another obvious area is in welfare payments, which in the UK are rolled up into a package called Universal Credit. It is not yet a Universal Basic Income, but could well be leading into one.
Thank you for sharing this. It's easy to forget that countries all around the world are pushing ahead with CBDC at their own rates and using various schemes to pull it off.
You're probably spot on in guessing how they'll get widespread adoption of it. They're going to go after known weaknesses in our lives and livelihoods. The thought of them doing that with the tax rebate/return terrifies me especially. That's not one I had envisioned. I get a huge chunk of money back every year and I depend on it to reinvest in my business from year to year. If they force us to retrieve those funds as CBDC, I don't know what I'd do. I'm sure they'd be "kind" and offer a cash alternative, so long as I was willing to pay a 30% fee for the inconvenience of it. Something of that nature to disincentivize people from going that route.
I think the bigger problem is that people just aren't paying with cash anymore. The report itself says it. Whenever possible, I shop local and I pay with cash. My friends act like I'm nuts. Like how dare I inconvenience myself by going to the store in person or going to the ATM to withdraw money. I think that's the real problem here, like everything else in our society. People have fallen in love with how easy the digital-verse has made things. If given the option to buy their first home via CBDC or to start getting paid with digital funds, I think the vast majority would agree to it no question.
Thanks for sharing! I wish people would realize that if the government has to trick or incentivize us into doing something, then it's no good.
The writer lays out five different ways they'll make the digital currency stick. Sadly, I don't think many people will be able to resist all five. Take the government payments, for instance. I'm self-employed and make my estimated tax payments directly to the government four times a year. What am I going to do if they demand it be done via CBDC? Or what if they refuse to give us our tax refunds in anything but CBDC? I think I mentioned this in my post, but I'm guessing there'll be a penalty if you don't pay in or accept their preferred currency. It's like being assessed a fee for paying with a credit card vs. direct deposit.
I will say this though: I plan on fighting this with every breath in my body. I hope anyone else who reads this plans to do the same.
A belated reply to this, but eight days after you published this, the Bank of England produced a lengthy 'consultation' , due to close in eight days' time, on the 'key features of a potential model' CBDC, not on whether a CBDC is needed or wanted. It's worth reading if you have the time and inclination, but I'm sure that nothing in it will surprise you. It's ironic that the supposed 'case' for a CBDC is partly based on the numerous forms of electronic payment that are currently available, when they should actually deem CBDC to be superfluous.
https://www.gov.uk/government/consultations/the-digital-pound-a-new-form-of-money-for-households-and-businesses
My guess as to how CBDC will be implemented is via mortgages and business loans. With base rates now gradually being raised to pre-crash levels (the BoE base rate is currently 4.75% and expected to rise to 5.5%), anyone holding a large amount of debt is in a vulnerable position. In the UK most first-time-buyers get lured into the housing market with a low-interest fixed rate mortgage lasting two or three years, whereupon they will then seek the best deal available, which could just last another two or three years; and so on. It could be that a CBDC loan is the only one available. It would prevent them from withdrawing equity if needed, though it is unlikely that many would want to risk doing so if rising interest rates mean that property prices take a downturn. A CBDC mortgage would also groom those mortgagees to accept CBDC as normal for use in other circumstances.
One other possible area that CBDC could be introduced is if you are lucky enough to get a tax rebate, in the UK from HMRC, in the US I guess that it is from the IRS. That rebate could be time-limited and expire after, let's say, six months if it hasn't been spent. Another obvious area is in welfare payments, which in the UK are rolled up into a package called Universal Credit. It is not yet a Universal Basic Income, but could well be leading into one.
Thank you for sharing this. It's easy to forget that countries all around the world are pushing ahead with CBDC at their own rates and using various schemes to pull it off.
You're probably spot on in guessing how they'll get widespread adoption of it. They're going to go after known weaknesses in our lives and livelihoods. The thought of them doing that with the tax rebate/return terrifies me especially. That's not one I had envisioned. I get a huge chunk of money back every year and I depend on it to reinvest in my business from year to year. If they force us to retrieve those funds as CBDC, I don't know what I'd do. I'm sure they'd be "kind" and offer a cash alternative, so long as I was willing to pay a 30% fee for the inconvenience of it. Something of that nature to disincentivize people from going that route.
I think the bigger problem is that people just aren't paying with cash anymore. The report itself says it. Whenever possible, I shop local and I pay with cash. My friends act like I'm nuts. Like how dare I inconvenience myself by going to the store in person or going to the ATM to withdraw money. I think that's the real problem here, like everything else in our society. People have fallen in love with how easy the digital-verse has made things. If given the option to buy their first home via CBDC or to start getting paid with digital funds, I think the vast majority would agree to it no question.
A view from Israel if you haven't already seen it:
https://efrat.substack.com/p/soon-your-money-wont-be-money-and
Thanks for sharing! I wish people would realize that if the government has to trick or incentivize us into doing something, then it's no good.
The writer lays out five different ways they'll make the digital currency stick. Sadly, I don't think many people will be able to resist all five. Take the government payments, for instance. I'm self-employed and make my estimated tax payments directly to the government four times a year. What am I going to do if they demand it be done via CBDC? Or what if they refuse to give us our tax refunds in anything but CBDC? I think I mentioned this in my post, but I'm guessing there'll be a penalty if you don't pay in or accept their preferred currency. It's like being assessed a fee for paying with a credit card vs. direct deposit.
I will say this though: I plan on fighting this with every breath in my body. I hope anyone else who reads this plans to do the same.
Efrat is worth following if you don't already. She's just re-stacked this:
https://cbdcwatch.substack.com/p/my-guest-post-on-bowtiedbull-life
Thanks! I just subscribed to both.