Russia’s CBDC Launches August 2023

By: Bobby Casey, Managing Director GWP

T​here’s been a lot of talk about Russia lately. Obviously, the Ukrainian conflict has been wearing on everyone to some degree. Some are still ardent supporters of Western support of Ukraine, while others are watching the days pass and bill rack up, and their support is waning.

W​e even did a little piece on the conservative enclave for expats that Russia is considering building.

F​or the most part, everything to do with Russia in the West is some sort of scandal or corruption. The US has even gone as far as making up collusion stories out of whole cloth. So Russia is a hot topic, but with very bold and strict guidelines.

Another big topic is crypto currencies and Central Bank Digital Currencies. We’ve covered that quite a bit here, but there’s plenty on the development of this alongside the myriad regulations being rolled out to regulate crypto currencies.

W​hat is scarcely seen in the same headline those two topics. You don’t see anything about Russia’s launch of CBDCs. Yet it totally happened.

O​n July 21st, Russia announced a launch of its own CBDC.

I think this will be an interesting case study. On the one hand, you have advocates of it touting how CBDCs will serve to work around sanctions. On the other, you have detractors saying say good-bye to privacy.

T​o be clear, just because I’m skeptical or even against something, it’s not because it has no redeeming qualities. It’s because the negative qualities, on net, simply aren’t worth the positive ones.

I​f you made a list of pros and cons to any given issue or policy, and the list of pros wrapped around the building twice, while the cons only had two line items, I would still need to weight out whether the cost of the cons are worth the gain of the pros. That’s what the negatives are: costs.

Russia started piloting this with some Russian banks back in February 2022.

Safeguards Russia chose to carry forward include:

T​hat all sounds good. But the bigger question is: are these all good enough to offset the trade offs? You start with the little things like you can’t accrue interest on digital rubles, nor can you open joint accounts with multiple people on that account.

T​hat’s not great, but it’s not insurmountable.

T​hen you move into that grey space where something doesn’t smell right, but it’s unclear what exactly is wrong with it. In this case, the BoR reserves the right to enter into agreements with other CBDC operators of not only of a foreign state, but also of a group of foreign states.

I​s that bad? Definitively, no. Potentially, yes. The potential lies in the same issues that the EU has with the Euro. Economically stronger countries like France and Germany are left to prop up weaker countries like Greece or Portugal. The independent sovereignty over currency is put at risk with such an undertaking. Not guaranteed, but at risk.

While all of those things are nice, the skeptics make some observations that are very difficult to refute:

This is the brainchild of the Central Bank, and the project itself is globalist, from the global financial oligarchy (IMF, World Bank, WEF). This Central Bank Digital Currency (CBDC) is also being implemented in China, the USA, and the European Union; UK Prime Minister Rishi Sunak actively advocates for it in Britain, etc. To put it quite simply, a new equivalent of programmable money has appeared, which is directly under the control of the Central Bank.

This is no longer fiat money, since its functionality is “floating”—it depends solely on the intentions of the platform operator (in our case, the Bank of Russia). At the same time, this is not a cryptocurrency—it is most logical to compare this digital currency with a conditional settlement method in a computer game, which is established, controlled and modified by the developer.

I​t has the underpinnings of a dystopian society because there are two things this points to: absolute transparency of the users and their accounts and absolute central control by the Central Bank.

You could honestly tell me CBDCs would solve world hunger and end violent crime upon enactment, and I’d still not endorse it. All the mission creep and potential bad that exists in this experiment are likely to happen, and I dare say it will happen on a relatively short timeline.

I​f you think about the petty mandates that have rolled out just during the pandemic or even in the name of environmentalism, they all either took it to the Nth degree or are swiftly heading there.

There was recent talk about the Biden administration banning gas stoves. Even when the fact-checkers tried to mitigate that and claim it was ‘false’, it wasn’t actually.

The notion that the government may regulate some stoves out of existence in the future isn’t totally baseless. In an interview published Monday by Bloomberg News, Richard Trumka Jr., a CPSC commissioner who was nominated to the post by Biden and has concerns that gas stoves emit dangerous levels of toxic chemicals, was quoted as saying: “Any option is on the table. Products that can’t be made safe can be banned.”

H​e was talking about new products. But that’s usually the case. They didn’t gut homes with lead paint and asbestos. They put warnings on them by the year built, and stopped producing those products after a certain date. That’s the ban.

W​hen confronted about hot water heaters, among other large home appliances, Press Secretary, Karine Jean Pierre confirmed the agenda, but also dismissed the concerns since the policies won’t kick in until 2029.

I​t starts small, until you’re replacing all your home appliances with very expensive “Climate Friendly; Carbon Neutral” stuff.

T​he seemingly muted averse potential will indeed actualize into something very real. That’s how it goes. That’s how regulations go. That’s how deficits and spending debt goes. It’s rolled out as sensible and well regulated but soon proves to be one more thing that keeps poor people poor while chipping away at the middle class.

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