Monetary Systems and The Future  by@moderneremite

Monetary Systems and The Future

Central Bank Digital Currencies (CBDC) are not cryptocurrencies such as Bitcoin or Ethereum. CBDC is created by Central Banks; however, what is the difference between an account in a central bank and an ordinary bank account? CBDC will be the digital equivalent of the money that we have at present. CBDC are not money in the proper definition of this word either. What is the purpose of it? In order to answer this question, we have to consider the following things and look for which answers emerge: Who is in charge of our funds? Can our funds be used in any way we can?
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Modern Eremite

Crypto researcher | Writer |Quality over Quantity | 2x Top Story on HackerNoon

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A short story about your future

John has finished his night shift as a security guard in some international corporation and went straight to the convenience store to buy something sweets for his granddaughter.

It was the day of her 5th birthday party to which John was invited. He was looking for something extraordinary when he finally saw a gigantic box with various sweets inside.

The moment John saw it, he knew it would be ideal for the gift. Having checked his account promptly, John saw that he had enough money to live till the next payment, so he decided to make the purchase. John took the enormous jar and went to make the purchase.

The payment has been declined

John was a little shocked by this message; however, with all those technical novelties, it is clear that mistakes happen, aren’t they? So John made his second attempt.

The payment has been declined. To access more information, please check your personal profile

How come John cannot make the purchase if he has sufficient funds in his account, you might think. The situation seems illogical. Something must have happened to his payment card; it is the only sensible reason.

John took the smartphone out of his pocket and checked his profile. A new message was waiting in his information box, along with a bright red notice saying The payment has been declined due to personal limitations.

- How can I be limited by this stupid profiling system they just introduced two months ago? It is something for those teenagers out there and not for me, an old chap.

Nevertheless, John read the message. Read it while standing there in disbelief. He was not even angry, not even sad. He just stood there. Empty. Helpless. Outplayed by the world and society to which he devoted his entire life. He did not go to his granddaughter’s birthday as he was too ashamed to go there without any gift, and he did not have enough time to search for something else. John headed home to his old armchair. The last thing that reminded him of the past times he used to live in.

The message on his personal profile was as follows.

*Citizen no. L3789B4 — John Smith*

Due to health problems caused by diabetes, it is highly advised not to accept any purchases of sweets, food containing a high level of sugar, and any alcoholic beverages until further notice. Dr. Samuel Thorace. Society needs you healthy John Smith. You will accomplish great things in the bright future that will come with our hard work and effort. We care about you.

*The message has been sent automatically as a reminder.*

The introduction of CBDC — Central Bank Digital Currencies

Let us begin with a short explanation of what CBDC are and what they are not, no matter how the concept is presented to the broader public.

CBDC are not cryptocurrencies such as Bitcoin or Ethereum. CBDC are not money in the proper definition of this word either. There is also a claim stating that CBDC will be the digital equivalent of the money that we have at present.

However, are we using cash all the time?

At the moment, we are paying at checkout using our credit card; we are purchasing tickets via the Internet with our digital funds. Is this not a form of digital currency?

When we think of the monetary system nowadays, its substantial part is digital to such an extent that cash is a rare view to see. So why are we talking about digitizing our money if those are already digital? What is the purpose of it?

In order to answer this question, we have to consider the following things and look for answers which will emerge:

  • Who is in charge of our funds
  • Can our funds be used in any way we like
  • How private is our account

Who is the one in charge?

Let us begin with the first of the listed criteria. As the name states, CBDC is created by Central Banks; however, what is the difference between having an account in a central bank and an ordinary bank that we know?

A bank is a bank.

At least, most of us think so.

The truth is, those two institutions are not equal. Central Banks are responsible for managing and creating monetary policies of given countries in most cases. You can think of it as The Bank of a given country. It is an oversimplification; however, the details and discrepancies of the banking system are not of the utmost significance here.

- Oh, so Central Banks are just the superior banks for which the country is responsible? It is not so bad then. I trust my government.

The answer is — it depends. Whether Central Bank is an institution tied and managed by the government or a private institution entirely or to some extent depends on the country. Taking the United States, for example, with its Federal Reserve System, also called FED, it is not so true to say that FED is a state institution.

However, FED is also not private. In this case, the Board of Governors is an independent government agency. The individual Federal Reserve Banks, on the other hand, are private institutions in which you can hold stocks and earn dividends.

This leads us to the point where we are aware that our funds will be held by the Central Bank itself. The institution which, quite often, single-handedly influences or creates the state monetary policies.

Personal accounts stored and maintained directly by Central Banks will significantly alleviate the influence on the financial policies that Central Banks already pose. It will also be dramatically easier to control the individuals within the society.

Freedom of use

If the Central Bank is in charge of our funds, can we use our funds as we like?

Well, yes and no.

The freedom of choice is not going to be restricted within the previously established boundaries. However, can such a choice be called freedom? Can we agree that the choice of books to read while being supervised on every step in prison be called freedom?

I do not think so.

The state, which pretends to act in the name of the highest virtues, will set the boundaries, and societies will have to obey in order to create an idyllic world. The world in which everyone is the best version of himself thanks to the state. However, this world is an ideal one from the perspective of a government.

The world where the state does not have to be afraid of nonconformists going wild or acting against the will of the ruling party. To me, such a world resembles the one portrayed in the great book 1984 written by George Orwell.

Time also plays a significant role here as some CBDC can be and probably will be time-based. Some voices speak of the immoral spending of the funds sent by the government to help people in need. The families living in poverty are being given some money that is spent on alcohol rather than on food. The people who faced some natural disasters in a given area are buying electronic devices and other unnecessary items rather than buying clothes and ensuring safe shelter for their children.

We are aware that such situations take place even more often than we might think. However, can it be the spark that will ignite the public debate and advocate for time-based CBDC for every citizen? It definitely can.

When it happens, what will be the way of saving money?

How will we be able to store savings in order to achieve the goal of financial freedom?

Well, freedom of the individual is something that CBDC is going to annihilate, so come up with the answer for yourself.

Nevertheless, let us assume that time-based CBDC is not implemented, and we can still manage our savings. In such a situation, we shall focus on the problem of our funds being frozen by the bank due to a violation of the account or the law of a given country.

What can we do if our funds are frozen on our account, and every transaction can be monitored and located?

The answer is not much because we are only left with the cash. However, the introduction of CBDC is the first step to a swift cleanses of all the cash within the system. When it happens, we can do nothing. That is the answer to the previous question.

What do we have to do to freeze our funds on the account? Well, the answer is — anything that the state or the bank will not like. Any act of disobeying, any rebellious tweet, any written article that the party will not like.

That is the freedom of the money we will be left with.


The future does not seem to be so bright for our privacy. Not everyone is concerned with this ongoing change; some people claim that privacy is the cost we have to pay in exchange for security.

I am not saying that this is an entirely false or wrong claim; however, I am not an enthusiast of exchanging my privacy for security.

So how does CBDC endanger our privacy?

It is highly possible that to create the monetary system based on CBDC societies will have to share personal information at the very beginning. However, the further we delve into the system, the more visible the notion of collecting personal data is; even the data that is not crucial or even needed for the system to work correctly.

The next step in data collection will be the medical records of people suffering from severe or chronic illnesses.

This will significantly limit the use cases of using money as well as will give away the information that should be kept private and shared only with the medical personnel. Medical records as the next reasonable step along the route of collecting as much information as people are willing to give away is an eerie vision.

The point at which the Central Banks and institutions connected to the CBDC system will cooperate to gain almost limitless control of society will come shortly after.

When the time comes, people would have to use designated applications to use their funds. However, being constantly connected to the systems managing their personal profiles, such applications might not be as great as we may think.

The society in which everyone will have a profile is not as distant in time as it might seem. The very inception of the ranking system in China called the Social Credit System took place in 2009. Since then, more and more institutions are taking an active part in enforcing the mentioned system or the system whose underlying mechanics resemble the one from China.

The summary

All of the aforementioned ideas and anticipations are not to be laughed at but taken with the greatest caution.

Even if those seem ridiculous to some of us, it is better to be following the way of caution than the way of negligence. The future of the monetary systems is the very beginning of the new chapter in the great book of humanity. However, the inception of the CBDC system will probably bring an end to the privacy and the freedom of an individual as we knew in the past.

We can say “The future is now old man”, however, not only the elderly will be perplexed about the revolutionary monetary system that is slowly emerging, but everyone who will find out that the freedom of spending our money as we like is no more.

Then the time will come to say that the freedom of privacy and the freedom of the individual is no more. Yet, I hope I am wrong.

“Permit me to issue and control the money of a nation, and I care not who makes its laws.”

Mayer Anselm Rothschild

Lead Image by Christine Roy on Unsplash

Also published here.

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