The War on Cash for CBDC will end in a digital concentration camp

But cash is dirty and criminals use it, so isn’t it just a case of good riddance? Well, maybe. Cash is a means of escaping from negative rates, as the ECB puts it. This creates a phenomenon called the zero lower bound (ZLB). If central banks pursue an expansionary monetary policy path, they will need to decrease the interest rate. At a certain point in time, the deposit rate facility (the ECB’s main tool) will reach zero. If interest rates were to become negative, people could withdraw their savings and prevent a levy meant to increase consumption. As long as cash exists, there will be no negative interest rate. From 1999 on, it is clear that the ECB is struggling with the ZLB. Although inflation has been higher than two percent, for example in 2017, the interest rate was kept slightly below zero. Stimulating the economy in Southern Europe is of greater importance to the ECB than protecting the purchasing power of Dutch pensioners.

To circumvent the ZLB, central banks might substitute cash for CBDC’s. A digital currency does provide for the opportunity to impose negative rates and hence enlarge the number of instruments available to central banks for so-called monetary policy transmission. To impose a negative interest rate, banks and central banks need to know the balances in citizens’ savings accounts. Obviously, cash in your pocket does not yield any interest, positive or negative. Therefore, CBDC will be accompanied by a digital passport. Issuing passports in the EU is a competence of the national parliament.

The Dutch parliament voted against a digital passport, something the ECB and the European commission ignored. That is a violation of the Dutch Constitution. If it is used to introduce CBDC, not only will cash disappear, but all venues for escaping negative rates. The problem with cash, from the viewpoint of the ZLB, is not the fact that it is physical; the problem is that it presents ordinary people with a means of saving without facing negative rates. Hence, for a successful launch of a digital euro, all exits need to be closed, including the use of stablecoin.

That entails an end to the free movement of capital, right after our constitution was violated. All steps down this digital road reveal another infringement on our civil rights. Eventually, a digital passport combined with AI-driven opportunities for law enforcement may result in a society consisting of powerless individuals. As the European parliament lacks a right of initiative, citizens are at the mercy of unelected officials. We discussed it at the Macroscopic Podcast which you can watch below.

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