Why are CBDCs a problem?

How are modern CBDCs defined?

CBDCs, they emerge in response to a private initiative to create a currency backed by a basket of various currencies and sovereign debt. A powerful machine for speculation and peer-to-peer politics between a company and states (sometimes states also function as another company). This happened in 2019 (Pound, M. Zuckerberg).

What were the differences between Facebook's Libra and the International Monetary Fund's (IMF) Special Drawing Rights?

The main difference was who was doing it, rather than what they were doing. Both Pound and SDRs are defined as a basket of currencies and/or sovereign debt of major international currencies (US Dollar 41.73%, Euro 30.93%, Chinese Yuan 10.92%, Japanese Yen 8.33%, British Pound 8.09%). Mark Zuckerberg's aim was to define a crypto for global use, beyond this argument there is room for much speculation, although this is easily fuelled by the Cambridge Analytics scandals and the political interests that have come to the surface.

More information on SDRs on the IMF's website 

First alarming reactions.

On 19 June 2019, Mark Zuckerberg announced his Libra project.  

The first statements from central banks were not long in coming, on 2 August 2019 the head of the PBoC Research Office, Wang Xin, directly addresses the issue of a Digital Currency of the Yuan, which we have recently learned will be called DCEP (Digital Currency Electronic Payment), and speculation began about its launch date for 2020.

Shortly afterwards, as more information was requested, central banks and international bodies began to make statements and made it clear that the project as it was proposed was unfeasible (it would be confronted with all the regulations to prevent it from seeing the light of day.) After several international negotiating tables, it was decided that there would be a crypto pound, associated with each fiat currency, but that this could not resemble an SDR. Facebook changed the name of its project to DIEM, and subsequently got rid of it by selling it to a US bank.

Is a CBDC good or bad?

A Central Bank Digital Currency, per se, is neither good nor bad. It is like a scalpel, in the hands of a doctor it can save lives, in the hands of a madman it can end them. 
in the hands of a doctor it can save lives, in the hands of a madman it can end them. The CBDC option, is something very similar to the scalpel. 

Initially, I defended the idea that a CBDC could be an interesting idea for the current state of the Financial System. And although I spoke having analyzed part of the problems, the truth is that I was naïve. I believed that Central Banks and Commercial Banks would see the importance of taking advantage of this opportunity to modernize their business model, and to a large extent reduce the regulatory burden they bear in the current model, which is largely responsible for their COEs>ROEs.

But breaking with the current business model of deposit management was too deep and risky a change for a significant part of the commercial banking sector.

Let's think that Central Banks defined the model and its regulation and Commercial Banking currently holds more than 90% of all the money in circulation worldwide. This gives it a strong position to negotiate with Central Banks.

On the other hand, the option of a retail CBDC, which is open and its Ledger is more decentralized than centralized in a Blockchain like Ethereum, would mean the loss of a key resource for commercial banking.

On the one hand, it would be a loss of its main source of funding, bank deposits, which are cheap and essential to offer credit (one of its key activities). On the other hand, the management of bank deposits is a necessary argument to charge commissions and management fees (let's remember that currently around 33% of a bank's revenues are commissions, without them they would be in the red).

Therefore, moving to a wallet system, and losing the management of deposits is an option that, unless it is an imposition, goes against the business model of commercial banking.

On the other hand, States have achieved in successive regulations, a level of confiscation of economic resources on citizens and companies, which is only possible if banks continue to keep their customers' deposits.

In this scenario, the strong party is the State and the financial system, and the weak party is the citizens.

The problem comes with the abuses of power, and the increasing distrust of citizens. The States, when they abuse their confiscatory and tax collection powers, transmit legal insecurity to the public. The banks, when they have to face new cost structures, pass this on to their customers, and this also transfers mistrust.

The basic debate is that if FIAT money does not generate confidence, it will only be used to pay taxes, and commercial and professional transactions will begin to be carried out with alternative means of payment. This will have important effects, not only on the economy, but also on the very structure of the States.

Let's not forget that, in Democracy, citizens are the voters, and ultimately, they have the freedom to lose confidence in their Fiat money, being able to adopt another Fiat currency, crypto or asset.

Why are CBDCs a problem as they are being raised?

Therefore, I believe that this issue will not be closed until all parties, especially citizens, are satisfied?

And this requires changes in mentality, but not those proposed in the CBDC models defined by the main central banks and international organizations. These changes generate mistrust because they reduce citizens' freedoms by defining money as an instrument of control to defend the interests of central banks, their monetary policies and limit the private and anonymous use of money by citizens.

Too many abuses, attempts to minimize the separation of powers in democracy and the vulnerability of private property. Citizens are very tired, and their distrust in recent years undermines their faith in institutions. 

In 2007, central banks and politicians consented to a perfect storm and did not act until it burst. Only a few companies have been held accountable for their actions, which disappeared overnight, but politicians have not been held accountable, and even fewer have been held accountable at the political level, nor at the regulatory level, nor have they been held accountable for criminal or patrimonial liabilities. As it usually happens, the broken dishes are always paid by the citizens. This cannot go on like this. 

It is not complicated to adopt political measures, when there is a conflict between your conscience and the welfare of your family, when adopting measures that you know will never have a criminal or patrimonial responsibility, even though they will mean a hard and unjust punishment for society. 

The statements made by the IMF through Mr. Bo Li, far from reassuring the public, have managed to generate more concern.

Institutions such as the IMF or the BIS, which arose during the Second World War for a new Gold Standard model defined at Bretton Woods, continue to hold power even outside this gold standard after leaving it in the United States in 1971. Institutions that are born under the protection of a series of impositions that the United States imposes on the rest of the world and that even today are highly questioned and that dance to the tune played by the FED.

Let us recall Jerome Powell's recent statements justifying the Fed's rate hike to almost 4% as a measure to combat inflation. The problem is that the inflation we have is not demand-driven, but cost-driven, and the rate hike does not help this war, but it is tremendously useful for other wars, especially trade. 

A strong dollar makes imports cheaper, and raises exports, especially of gas, and others. A cat that we assume the rest of the citizens of the planet. 

We are governed to defend interests that are not those that best represent us, and the negotiation of the CBDCs is carried out by those who have not been elected by the citizens, and in addition they are judge and party in all this matter.

IT IS NOT SURPRISING THAT THE OPINION THAT CBDCS ARE A PROBLEM IS SPREADING FASTER AND FASTER.