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Banking Crisis to Result in Turmoil, CBDC Adoption, and Complete Surveillance Economy

Published by Tavex Analysts in category Economy on 17.04.2023
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The banking crisis in the United States, which resulted in the failure of three banks, has led to speculation that the Central Bank Digital Currencies (CBDCs) and the establishment of a complete surveillance economy are being orchestrated. This article explores the perspective of Lynette Zang, Chief Market Analyst at ITM Trading, who argues that a significant crisis is required for the public to accept CBDCs, and that they will ultimately lead to a full surveillance economy.

The persistent banking crisis in the United States, which led to the collapse of three banks – Signature, Silicon Valley Bank, and Silvergate – has likely been orchestrated to pave the way for Central Bank Digital Currencies (CBDCs) and the establishment of a “complete surveillance economy.” Lynette Zang, Chief Market Analyst at ITM Trading, asserts this perspective.

Zang explains that a sufficiently large crisis is necessary for the public to accept CBDCs. “This also transitions the world into a total surveillance economy that the central bank can directly control if all your wealth is within the system.”

CBDCs are fiat tokens created and managed by central banks, serving as an official medium of exchange, similar to cash. Although they aim to enhance transaction speed and security, critics argue that they can be utilised to monitor, trace, and sanction individuals, thus undermining privacy and civil liberties.

With five decades of experience in finance, including positions at Larson Lehman and American Express, Zang believes that CBDCs are inevitable and will be introduced during a crisis to mitigate economic damage.

She anticipates that during a significant crisis, dissenters will be quieted if they believe that CBDCs will “save the day.” However, Zang argues that this is not the case, and that CBDCs will usher in a full surveillance economy.

CBDCs also offer the potential for more precise monetary policy implementation, such as imposing negative rates on users, causing bank account balances to shrink over time.

Zang emphasises that CBDCs are primarily about control and the ability to erode principal. “Negative rates target your principal… The introduction of a CBDC doesn’t signal the end of this crisis, but rather the next phase.”

De-Dollarization

Following Russia’s invasion of Ukraine, the United States and its Western allies imposed severe sanctions on Russia, including freezing $600 billion of its foreign assets and excluding Russian banks from the global SWIFT payment system.

Zang notes that these actions have accelerated Moscow and its allies’ efforts to create a U.S. dollar alternative for international trade. The BRICS (Brazil, Russia, India, China, and South Africa) alliance plans to unveil a new reserve asset at their August meeting.

Zang contends that “battle lines have been drawn” and that the United States has been arrogant in dictating who can participate in the global financial system.

She predicts that the International Monetary Fund’s Special Drawing Rights (SDR), a reserve asset comprised of various currencies, will serve as the new reserve currency and facilitate de-dollarization.

Zang explains that countries holding dollar-denominated assets can deposit them into the IMF, which can convert them into SDRs, which can then be exchanged for other currencies. “The BRICS currencies could have a larger weight within the SDR… De-dollarization could be more easily achieved using the IMF’s substitution fund.”

Role of Gold

As de-dollarization accelerates and the world moves towards adopting CBDCs, Zang recommends investing in physical precious metals.

Zang highlights that gold has historically been the safest and most reliable method of hedging against a declining dollar, emphasizing that such cycles are bound to recur.

“Over 4,800 currencies have experienced what we’re witnessing now,” she asserts. “We’re at the end of this currency’s life cycle, which is why I’m in the gold business… Gold stored at home carries no political risk.”

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The emergence of Central Bank Digital Currencies has been a hotly debated topic, with proponents arguing that they can enhance transaction speed and security, and critics warning of their potential to undermine privacy and civil liberties. Lynette Zang’s perspective offers a unique insight into the matter, and highlights the potential consequences of CBDCs in a full surveillance economy. As de-dollarization accelerates, Zang recommends investing in physical precious metals such as gold to hedge against a declining dollar.

Gold price (XAU-GBP)
1,612.57 GBP/oz
  
+ GBP1.74
Silver price (XAG-GBP)
20.01 GBP/oz
  
+ GBP0.32

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