The Banks Are Doing What With CBDCs?!

Cryptocurrency and its continuing adoption is leading mixed with the government's continued money printing is only adding fuel to the fire. We will be discussing what the banks are doing about the situation.

I do extensive research and study to bring you the highest quality information. I'm not a licensed advisor, so this is for educational purposes. I value your time so let's get to the point. 


What is CBDC? Central Bank Digital Currencies

The report we will be talking about today was put together by the BiS (Bank of international settlements). If you aren't familiar with BiS, it is the bank for central banks. It's primary role is to facilitate coordination between the central banks around the world.

what is a central bank

Over the last couple of year the BiS has been working out how to handle cryptocurrencies. The solution that they are arriving on is that they need to create their own digital currencies to replace the currency types we are used to now.

We all know what money is, but have you ever though about how to define money?

What is money?

For most people, money means coins and banknotes.

what is money?

These are widely accepted forms of payment. They have a recognized value, are easy to handle and can be saved for the future.

Over the years, other civilizations and cultures have used all kinds of things to make payments.

Some of these are valuable because they are rare or useful. Some are the product of great craftsmanship. Others are dimply tokens which people agree to represent a certain value.

Economist define money as any good that is widely accepted as final payment for goods and services.

The BiS is planning on creating a new digital currency that will replace the old physical coins, banknotes and tokens we commonly use.

One thing to note is that the BiS creating a new digital assets but they are not cryptocurrencies by any stretch of the imagination.

Cryptocurrency vs CBDC

Cryptocurrency is the same definition I made before about money, the main difference is that there isn't a main governing body that controls the digital asset or token. The whole purpose of cryptocurrency is to move away from what the BiS is planning to do by creating their own digital assets because it will be governed by the BiS.

Here is a great Beginners guild to Bitcoin where you can learn all the fundamentals of crypto explained simply on Amazon.

Central Bank Digital Currency Information

The digital currency the CBDC is looking to create is centralized, offer next to no privacy and are permissioned. The currencies created by the CDBD will be controlled 100% by the central banks and the governments.

Currently almost every central bank is working on digital currency of it's own. Seven of the leading countries that have the most development are helping the BiS create a digital currency template for other countries to use.

The following is a list of those 7 countries:

  1. United States Federal Reserve
  2. European Central Bank
  3. Bank of England
  4. Bank of Japan
  5. Swiss National Bank
  6. Bank of Canada
  7. Swedish Central Bank

central bank digital currency report

There was a report released by the BiS from these banks on what the new digital currencies should look like. This was a preliminary report that covered the basics. Then later, the BiS released a new document in September of 2021 that we will also be covering.

The second report refines some of the information released from the first report and details how the digital currencies should be governed and used. This report is divided into three parts.

  1. Design and Interoperability
  2. User needs and adoption
  3. Financial stability implications

Don't worry I will be breaking each one of these down in plain English. The main point from the report centers around the public / retail digital currency. The point is a small but highly important because governments, central banks and institutions will have their own wholesale digital currency.

The wholesale digital currency is still being refined and doesn't have a complete solution as of yet. One thing we can be sure of is that regular people will use a different CBDC than the governing bodies like the government, bank and financial institution.

Not sure about you, that doesn't sit well with me.


Implications of CBDCs

From the report summary there is a section right at the end that states:

Finally, CBDCs would be likely to have wide-ranging impacts on public policy issues beyond a central bank’s traditional remit. Broad engagement and cooperation will play a key role in central banks’ future CBDC deliberations.

This is of concern becuase it impliest that CBDCs will be used to enforce public policy mandates. This means there will be new laws and legislation that will go into place that are wholly new could flip upside down many of the traditional policies we currently ahve in place.

Out with the old, in with the new. This may not end up being that bad but the terminology definitly makes some of my arm hairs stand up.

Central Banks might conisder measures to influence or control CBDC adoption or use. This could include measures such as access criteria for permitted users, limits on individuals' CBDC holdings or transactions... Such measures could be valuable for managing risks.

It's no secret that there are companies and individuals that cheat the system. So certain stipulations need to be put in place but it should be of note that there are tools being built on these digital currencies that will allow them control over the currency.

This is a main benefit of cryptocurrency. Remember cryptocurrency is basically a currency made by the people for the people. The wording in these reports don't tend to lean that direction. Nevertheless, central bank digital currencies are in our future so we need to be educated as to how they work and how to not be left holding the bag.

CBDC Design

CBDC design

Central banks would be the only entities entitled to issue and redeem a CBDC and would bear the ultimate responsibility for the design of the CBDC system and the operation of the core ledger.

The report stresses the imprtance of partnering with the private sector. Why?

There is absolutely no way that they could maintain the infrustructure that Visa has created. Visa has developed a vast network that allows users to make purchases seemingly instantaneously. There is a huge amount of processes that happen behind the scenes when you swipe your credit card.

There is no way that the BiS would or could recreate that whole process.

This means the CBDCs will need to play well with the private sector and needs to make it possible for the private sector to connect with their services.

This is a gross simplification of some of the implications that will happen when our governments will release their digital currencies. But needless to say it's going to take a lot of work and will likely be rolled out very slowly to insure stability.

Furthermore the report states:

If the central bank were to play too operational or dominate a role in the ecosystem, private intermediary participation could be curtailed with a reduction in the diversity, innovation and effeciency of the system...

The BiS is aware that they shouldn't play too large of a role or it would minimize adoption.

This means that the CBDCs need to be interoperable which means that the CBDCs need to play well with private institutions. In fact, CBDCs would fail if they do not get the buy in of the private sector.

I wonder how many pockets are going to be lined with fat stacks of cash in order for their company buy in? A LOT!

There will need to be mass adoption for major success within the CBDCs in order to create a healthy working ecosystem.

Mass Adoption

This is the section where the government tries to convince us peasants to use the new currency.

The reports not so subtly suggest that the reason they are making the new CBDCs is because of the widespread adoption of cryptocurrencies.

without continued innovation and competition to drive efficiency in a jurisdiction's payment system, users may adopt other, less safe instruments or currencies, potentialls leading to economic and consumer harm.

That sounds oddly threatening to crypto users.

The report stresses that rolling out the CBDCs too quickly, it could cause more harm than good. This is the same reason cryptocurrencies have scaling issues. They are scaling organically and fix the problems as they arise. The CBDCs will take a long time to achieve full adoption if they ever do.

Ironically they acknowledge that current cryptocurrencies have been improving the markets by:

transforming the markets for retail payments at pace over the recent years, with many new payment methods, platforms and interfaces evolving to become faster, cheaper and safer.

Sounds a little contradictory to their previous statement. So if you read between the lines they are saying they'd like control over the currency, that is something they don't have with cryptocurrency.

How dare those nasty little cryptocurrencies be safer, faster, and cheaper without us!?

As with all new technologies there is a vacuum that is filled when it comes to needs. The people have found the old financial system to be lacking and changes are being made that are threatening the control over traditional currencies.

In the end this was going to happen regardless. The current money system is not perfect, fast, and as safe as it could be. So innovation is pushing us to have a better system. Looks like the BiS is going to try and play catch up.

According to the BiS the main reason us peasants should adopt their new currencys are as follows:

  1. Security
  2. Low Cost
  3. High Liquidity - probably the strongest point in my opinion.
  4. Programmability
  5. Privacy - privacy? questionable.

One of the ways they'd like to urge us retail users to use their CBDCs are to:

...incentivize consumer use of CBDC by disbursing social benefits and transfers to individuals...


Allowing consumers to pay their taxes in CBDC...

Later in the report there are examples of how they could encourage adoption and it states that maybe a consumer doesn't want their information to be given the bank that grants the CBDC.... but literally the BiS would get all the consumers information instead... yeah. They missed the mark there.

Effects on the economy

First off, let's all agree if the goal with them making a CBDC means we get safer, quicker, cheaper transactions everyone will benefit. That is the wonder of competition. Obviously the BiS is feeling threatened and has been doing the research necessary to be competitive with cryptocurrencies.

This is a win for us plebians.

Up to this point I don't like the CBDCs. I fear that it would turn too much on it's head once fully rolled out. Ultimately Cryptocurrencies will be the place for my ditigal holdings. Like I mentioned earlier I think that we should all be as educated as possible with CBDCs and how they work.


  1. CBDCs are not Cryptocurrencies!
  2. CBDCs will likely be used in the future in place of our currenct coins and banknotes.
  3. The rollout of CBDCs will have a lot of side effects that will probably take many years to iron out.
  4. Competition is pushing the BiS to create CBDCs.
  5. My personal digital holdings won't be in CBDCs.

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