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CBDC ‘will not be anonymous,’ Fed chair confirms

'It would not be an anonymous bearer instrument'

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Yudi Sherman

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Yudi Sherman

Writer and Reporter

Shining a spotlight on media and government disinformation.

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September 28, 2022

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08:38 PM

Federal Reserve Chairman Jerome Powell last week seemed to confirm fears about central bank digital currencies (CBDC), raising questions about the implications of government overreach. 

A Central Bank Digital Currency (CBDC) is a digital currency issued and governed by a central bank. In the case of the United States, a CBDC would be a digital currency issued and controlled directly by the Federal Reserve.   

CBDC is like cash, which is backed by the Fed and whose value is manipulated by the Fed’s monetary policies.   

However, whereas cash transactions are anonymous, CBDC transactions are not, says Federal Reserve Chairman Jerome Powell. 

In a CBDC system, a citizen would have an account directly with the Federal Reserve, which would directly issue funds to the account and ultimately replace cash in circulation.  

“If we were to pursue a CBDC, it would at a minimum have the following four characteristics," said Powell during an event hosted by the Bank of France Tuesday. “First is intermediated. Second is privacy protected. But third is identity verified. So it would not be anonymous. It would not be an anonymous bearer instrument. And fourth is transferable or interoperable. So we would be looking to balance privacy protection with identity verification, which has to be done, of course, in today's traditional banking system.” 

The necessity for identification with CBDC is currently being justified by anti-money laundering (AML) requirements, as in the case of China’s digital yuan, debuted in 2020 by the Chinese Communist Party (CCP). In July, digital yuan project lead Mu Changchun said that at least some identification is necessary to prevent money laundering and “illegal transactions”. 

“The central bank’s digital currency is more portable. If it provides the same anonymity as cash, it will greatly facilitate illegal transactions such as money laundering,” said Mu. “Therefore, the central bank’s digital currency should not have the same anonymity as cash.” 

CBDC is considered the antithesis to cryptocurrencies, which are decentralized and continue to stoke government fears about not being able to monitor and control transactions. 

“We central bankers have been operating as a monetary anchor concerning the commercial banks and the private money,” said European Central Bank President Christine Lagarde last week. “If we are not in that game, if we are not involved in experimenting, innovating, or digital central bank money, we risk losing the role of anchor that we have played for many decades.” 

“And we have historical examples of periods when the central bank monetary anchor was not there, precipitating crisis after crisis. That certainly was the case at the time of free banking in the 19th century. Do we want to go back to those days? Probably not,” she added. 

This month, the White House directed government agencies and the Federal Reserve Bank to explore the technology needed to implement a central bank digital currency (CBDC). 

According to the Financial Times, CBDC would have to be tied to your digital ID.   

“What CBDC research and experimentation appears to be showing is that it will be nigh on impossible to issue such currencies outside of a comprehensive national digital ID management system. Meaning: CBDCs will likely be tied to personal accounts that include personal data, credit history and other forms of relevant information.” 

In other words, a digital ID would be a form of digital identification that would also be issued by the government and would be tied to everything you do.  

Think of it as a vaccine passport, but instead of it just being scanned when you enter restaurants or get an organ transplant, it would also be scanned when you buy gas, ride the bus or order groceries.    

At least, that’s what the World Economic Forum (WEF) envisions as part of its “Great Reset”.  

As reported by Frontline News, the WEF says on its website that “digital ID systems have enabled the authorities to identify populations reliably and remotely. . . . Digital ID, digital payments, and data governance are each important individually. Together, they add up to a powerful public good.” 

In March, economist and World Economic Forum (WEF) Global Leader for Tomorrow Dr. Pippa Malmgren told an audience during the New World Order panel at the World Government Summit that the financial system is about to turn digital and remain totally under government control.  

“And what we’re seeing in the world today, I think is we’re on the brink of a dramatic change, where we’re about to – and I’ll say this boldly – we're about to abandon the traditional system of money and accounting, and introduce a new one,” Malmgren said, smiling.   

She went on to explain that the new financial system would be digital.   

“And the new one, the new accounting, is what we call ‘blockchain’. It means digital, it means having an almost perfect record of every single transaction that happens in the economy, which will give us far greater clarity over what’s going on.”   

Malmgren acknowledged that there would need to be a “balance of power between governments and citizens,” which is why she believes there would need to be a “digital constitution”.   

But Malmgren then continued to say that this digital blockchain financial system is the property of the world’s most powerful governments.   

“This new money will be sovereign in nature,” she said. “Most people think that digital money is crypto and private. But what I see are superpowers introducing digital currency. The Chinese were the first. The US is on the brink, I think, of moving in the same direction and the Europeans have committed to that as well.” 

 

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