In mid-November, while the whole world was focused on the Ukraine crisis, the US midterms or whatever other “big story” the media decided was more important, a truly momentous shift took place in the global financial system. It might seem like a small step on the surface, but it has the potential to bring about a real and possibly irreversible sea change in the way we use money; or better said, the way it uses us.

This article was provided courtesy of Mr. Claudio Grass, Precious Metals Advisor in Switzerland and Ambassador of the Mises Institute in Auburn (AL), USA. Claudio has been advising HNWIs for more than 10 years on the best strategies to preserve wealth. For much of his life, he has travelled and studied around the world, first as an airline executive, then as a Swiss Peace Corp Officer on the Israeli Syrian border. For the past decade, he’s served as an investment manager specialized in precious metals. Visit his website ,here.

As Reuters reported on the 15th of November, “Global banking giants are starting a 12-week digital dollar pilot with the Federal Reserve Bank of New York. Citigroup Inc , HSBC Holdings Pl,  Mastercard Inc and Wells Fargo & Co are among the financial companies participating in the experiment alongside the New York Fed’s innovation center, they said in a statement. The project, which is called the regulated liability network, will be conducted in a test environment and use simulated data, the New York Fed said. The pilot will test how banks using digital dollar tokens in a common database can help speed up payments.”

Shockingly enough, essentially zero attention was paid to the story. Most media outlets mentioned it in passing and offered little to no context that would make the unsuspecting reader aware of the implications of this development. There was no mainstream discussion or debate about what this means or about how it can affect the average citizen, and no politicians, Fed officials or other institutional figures called any attention to it and argued either for or against it. There was one notable exception, though, one high-profile individual that noticed what could mark the start of a tectonic shift and thought the rest of the world should notice too: Edward Snowden.

The aforementioned context that should have been provided to the average news reader that is not necessarily familiar with the concept of CBDCs (Central Bank Digital Currencies) would include at least a brief explanation what they are, what purposes they serve and how they compare to existing fiat paper money. As I outlined in previous articles, the stakes are too high for people to ignore this development. Whoever controls the money, controls everything and the rise of CBDCs threatens to make that control absolute, closing whatever little “loopholes” of freedom may still exist today.

To most citizens, savers and taxpayers, the transition to a digital dollar might seem harmless, or even beneficial, given that the majority of the population today associates digitalization with convenience and speed. Indeed, if one doesn’t understand the ins and outs of monetary history, of fiat money and of digital currencies, this concept appears totally innocuous. But even for many who do understand these things, it might seem like such a step would really make no difference. Junk money is junk money after all, be it physical or digital, it’s still backed by nothing, right?

Well, that is right indeed, but there’s a lot more to it. While the currency itself will continue to be worthless, its digital form will come with a bunch of perks and advantages for central planners. As Eswar Prasad, professor of trade policy and economics at Cornell University, put it: “One should recognize that the CBDC creates new opportunity for monetary policy. If we all had CBDC accounts instead of cash, in principle it might be possible to implement negative interest rates simply by shrinking balances in CBDC accounts. It will become a lot easier to undertake helicopter drops of money. If everybody had a CBDC account you could easily increase the balance in those accounts.”

What this essentially means is that any choice that remains and any degree of financial sovereignty that is left in the present system could be easily wiped out by CBDCs. And its not only financial freedom that’s at stake: these centralized digital currencies can be used by governments to monitor, to control and even to directly punish dissenters, by blocking transactions, freezing their accounts or seizing they assets. Some might find that far fetched, but those are probably the same people who thought that China’s “Social Credit System” was far fetched too, right up to the moment it was actually implemented.

Claudio Grass, Hünenberg See, SwitzerlandPrecious Metals Advisor in Switzerland

This article has been published in the Newsroom of pro aurum, the leading precious metals company in Europe with an independent subsidiary in Switzerland. This work is licensed under a Creative Commons Attribution 4.0 International License. Therefore, please feel free to share. You can subscribe for my articles by clicking here.  

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