So why are central banks talking more and more about launching their digital currencies? Let's clarify what this is all about: the digital euro already exists, it has been circulating in banks and on our bank cards for a long time, and bills only occupy a marginal share in value, but are more common in terms of number of transactions. This digital euro that we are familiar with circulates in commercial banks, the ones that individuals and businesses use. This new digital euro would be managed directly by the central bank, thanks to a recent invention, the blockchain, a decentralized computerized register created for the first time for Bitcoin, but which would be a private blockchain here, not open to the public, as only the central bank could track transactions. This is known as central bank digital currencies (CBDC).
For the user, the advantage is better convenience. All he has to do is download a wallet on his smartphone, possibly that of his bank, which thus enters into circulation, in order to be able to instantly send money to a friend, which today remains a bit complex (need to go through the IBAN, a one day delay). Of course, he can also pay at a retailer or on the Internet. Contrary to the bank card, one can do with a CBDC what cash allows (pay from hand to hand).
And there, we begin to perceive the unacknowledged objective of these new digital currencies: to make cash obsolete, to contribute to its disappearance, to eliminate it definitively. For what fundamental reason? Its management is expensive (ATMs), it allows it to work under the table and to escape the tax authorities, it finances illicit trafficking (drugs). Certainly, but central banks also think of something else: cash allows them to escape negative rates.
For the moment, only a few banks in the EU charge a negative rate on their clients' deposits, usually for amounts exceeding 100,000 euros. All this seems a long way off, but this evolution is inevitable because the low and negative rates concern the majority of European sovereign debt, and this will increase with the post-Covid currency printing press. Banks can no longer remunerate the money sleeping in their accounts, nor the money in bank books and life insurance. However, the imposition of a negative rate would cause a shock to the population, and cash would appear to be an easy way out. Here is what central banks must absolutely avoid, because an explosion in the use of cash could jeopardize their policy of negative rates: if there is too much demand for cash, commercial banks will be forced to close their branches, which would create a crisis of confidence, and an economic crisis for that matter. The bills would become a parallel monetary circuit that would dry up the banks' resources and jeopardize all debt financing, both public and private.
This is why CBDCs are part of a plan to eliminate cash: make it useless and then ban it. And when all our money exists in digital form, we will no longer be able to escape a negative rate of -0.5%, -1%, etc. (who knows where it will end), which will erode our savings. This is why we must defend cash and thwart this project, because afterwards it will be too late.
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