The End of the World and Central Bank Digital Currency

Central Bank Digital Currency (CBDC) is a digital form of a country’s national currency issued and regulated by the central bank. While CBDCs have the potential to offer certain benefits, there are also potential dangers and challenges associated with their implementation.

Rogan didn’t mince words when asked for his thoughts on a CBDC:

“No fucking way. No way. That’s what I think. I think that’s checkmate. That’s game over.”

Joe Rogan

During a recent podcast, Joe Rogan and Post Malone spelled out a scenario where a tyrannical government could tie the flow of a CBDC to one’s social credit score, saying that citizens could easily be cut off from their finances for breaking the rules.

“If they decide somehow or another that you need some social credit score system and it’s for the benefit of society, and they outline that, they can track your behavior and your tweets and all your things […] They just decided you f@cked up, and the rules are the rules,” he said.

Introducing CBDCs could potentially impact the stability of the financial system. If consumers and businesses rapidly switch from traditional bank deposits to CBDCs, it could lead to a significant reduction in bank deposits, affecting the banks’ ability to lend and create credit. This shift could also increase systemic risk, making the financial system more vulnerable to shocks. CBDCs could lead to disintermediation, where consumers might prefer to hold their funds directly with the central bank instead of using commercial banks. This could reduce the amount of funds available for banks to lend, impacting their profitability and potentially causing a contraction in credit availability.

CBDCs could raise concerns about individual privacy, as central banks would have the ability to monitor and track transactions in real-time. While most CBDC designs aim to balance privacy with regulatory requirements, the potential for increased surveillance remains a concern.

The digital nature of CBDCs exposes them to various cybersecurity risks, including hacking, data breaches, and cyberattacks. A successful attack on the CBDC infrastructure could have widespread implications, affecting both individuals and the economy as a whole.

CBDCs could complicate the implementation of traditional monetary policy. Central banks rely on interest rates and other tools to manage the money supply and control inflation. With CBDCs, individuals and businesses might have more direct access to central bank money, potentially bypassing the commercial banking system and affecting the central bank’s ability to influence the economy.

While CBDCs have the potential to improve financial inclusion by providing access to digital financial services for underserved populations, there are challenges in ensuring equal access for everyone. Not everyone has access to the necessary technology or digital infrastructure to use CBDCs effectively.

CBDCs would centralize financial control even more, potentially leading to a concentration of power in the hands of the central bank. This could reduce the decentralization and diversity of financial intermediaries in the economy.

Technical glitches, outages, or system failures could disrupt the functionality of CBDCs, potentially causing inconvenience or financial losses for users.

Malone also mentioned his concerns with the banking system in the United States, noting that FDIC insurance only covers bank account values up to $250,000.

The pair also discussed the controversial decision by the Canadian government to freeze the bank accounts associated with the “Freedom Convoy” truckers in February last year.

Malone argued that the U.S. government has too much control over the flow of everyday people’s finances and that they could potentially cut off funding to anyone at a moment’s notice.