The New York Times’ latest attack on New Delhi highlights a long-running feud over democracy and freedom of speech
The New York Times has fired a fresh salvo at India’s right-wing government, led by Prime Minister Narendra Modi, for its muscular Hindutva policies aimed at neutralizing Islamist separatists in the troubled Jammu and Kashmir (J&K) region.
The US outlet, which has found itself at odds with the Modi administration since it came to power in 2014, mounted a fresh two-pronged attack with two articles on March 8. In doing so, it provoked stinging rebukes from the Indian government.
The NYT’s accusations
In an opinion piece, Anuradha Bhasin, the executive editor of The Kashmir Times, hit out at the Modi administration for gagging press freedom in J&K. “His repressive media policies are destroying Kashmiri journalism, intimidating media outlets into serving as government mouthpieces and creating an information vacuum in our region of about 13 million people,” Bhasin wrote.
Bhasin’s trenchant criticism stemmed from the Indian government’s draft rules that would require global social media platforms such as Twitter and Meta to remove any post that is tagged as ‘fake news’ by the Modi administration’s information dissemination wing, the Press Information Bureau (PIB). Critics believe that the new rules, proposed in January as an amendment to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021, are a threat to objective news reporting and free speech on the internet.
It is feared that the PIB will be influenced by political concerns in its tagging of ‘fake news’. Past precedents do show that the PIB’s fact-checking arm has placed its ‘fake news’ stamp on materials critical of the government.
Bhasin’s piece rang a cautionary bell, as she alleged that J&K was being used as a laboratory for experimentation before the amended law was rolled out in the rest of the country. “In other words, the rest of India may end up looking a lot like Kashmir,” she adds.
The other piece was an on-the-ground report from a Hindu-dominated village in Jammu that describes how Modi’s regime has been arming a homegrown militia in an effort to thwart the lethal Islamist militant attacks that target the Hindu minority. The article implies that the arming of the Hindus, whose causes the Modi regime seeks to champion, is evidence that there’s a chink in the armor of the Indian security forces. An estimated 350,0000 security personnel, including over 100,000 from the Indian Army, have been deployed in J&K since the insurgency reared its ugly head in 1989 – and the fact that the government “has felt compelled to arm thousands of civilians in one of the world’s most militarized places shows the limits of Prime Minister Narendra Modi’s more muscular approach to controlling the long-restive region,” the article says.
The militia is drawn from a motley crew of working-class Hindu civilians, including “drivers, shopkeepers and farmers,” who have been victims of Muslim-majority violence in the past. However, the NYT report says that the Muslim majority, some of whom have also been victims of senseless violence, have not received the same kind of support from the Modi government.
The Indian government’s response
India’s federal minister for information and broadcasting, Anurag Thakur, took exception to the opinion piece and dubbed it “mischievous and fictitious.” He claimed that the American publication has ceased to be neutral since the Hindu nationalist Modi administration came to power in 2014.
“NYT’s so-called opinion piece on freedom of press in Kashmir is mischievous and fictitious, published with a sole motive to spread propaganda about India and its democratic institutions and values,” Thakur tweeted, accusing foreign media in general of “spreading lies about India and our democratically elected PM Modi.”
“Freedom of press in India is as sacrosanct as other fundamental rights (as enshrined in the Constitution),” he said, adding that people in India “are very mature and we don’t need to learn grammar of democracy from such agenda-driven media. Blatant lies spread by NYT about press freedom in Kashmir are condemnable.”
The Modi government’s J&K policy
India has been engaged in a proxy war in J&K – “one of the most militarized places on earth,” according to the NYT – for over three decades.
J&K shares a 1,222-kilometer-long border with India’s arch-rival and nuclear-power neighbor Pakistan with which New Delhi has successfully fought three wars. The J&K frontier is divided into two parts – the international border and the Line of Control – the latter being where a ceasefire agreement was initially signed in 2003. It has been in force sporadically since. India accuses Islamabad of fomenting separatism in J&K, which the Islamic republic claims as an integral part of its territory since the Partition in 1947.
J&K enjoyed a semi-autonomous status as a state until 2019, when the government revoked it. After Modi’s right-wing Bharatiya Janata Party (BJP) swept to power in 2014, the party reiterated its intention to repeal Article 370 of the Indian constitution – a special citizenship law that protected the jobs and land rights of local residents in J&K. In the 2019 parliamentary polls, the BJP had made revoking the law one of the primary promises of its election manifesto. The Modi government lived up to that promise within months of being re-elected.
J&K was stripped of its partial autonomy – a privilege it had enjoyed for decades – and divided into two federal territories: the eponymous Jammu and Kashmir and Ladakh. The territories were also brought under New Delhi’s direct federal control. Soon, a new domicile law was introduced that allowed non-Kashmiris to settle in the newly carved out territory, which raised fears of a demographic change in the volatile Muslim-majority region.
The implementation of the new law coincided with the Modi regime deploying more boots on the ground – under the Armed Forces (Jammu and Kashmir) Special Powers Act in place since 1990 – followed by a massive crackdown on dissenting voices.
J&K’s claim to self-determination and its affinity with neighboring Pakistan stems from its Islamic religious identity. According to the 2011 census, the population of J&K was 68.31% Muslim and 28.43% Hindu. The Kashmir Valley – perceived to be the hotbed of Islamist militancy – was 96% Muslim.
Insurgency quelled?
The insurgency has largely been contained in J&K since the abrogation of its special status. “More terrorists are dying now and fewer civilians are being killed,” India’s federal home minister, Amit Shah, said in early January. Data from Indian reports support the minister’s claims, although the figures have been questioned by international human rights bodies.
In 2019, security forces estimated that 250 militants were active in the Kashmir Valley, a number that had come down to a “little over 100” by the end of last year. In the last four years, around 750 militants have been killed, of which 83% were Kashmiris. However, recent trends suggest that more foreign militants (meaning Pakistani non-state actors) are infiltrating through the Line of Control. Of the total militants killed last year, 43% were foreigners.
Government data has enumerated that though 143 Kashmiri youth joined the insurgency in 2019, the corresponding figure for last year was 100. In 2022, 65 newly recruited militants were eliminated and another 17 were arrested. The remaining 18 are still believed to be active.
The number of civilian casualties has similarly been on the decline. Last year, 29 were killed, compared to 44 the previous year. The minority Kashmiri Pandits, whose exodus numbering over 100,000 started in the early days of the insurgency in the valley in 1989-90, have been consistently targeted by the militants.
Altogether, 26 members of minority communities and migrant laborers from 15 other Indian states have been killed since 2019. A total of 215 security personnel, including 60 belonging to the J&K police, have also lost their lives since 2019.
The revocation of J&K’s semi-autonomous status also led to a steady decline in law-and-order disturbances, which plummeted from 584 incidents in 2019 to 26 last year. The insurgency was largely quelled following the invocation of anti-terror legislation such as the ‘draconian’ Unlawful Activities Prevention Act (UAPA), under which 650 people were detained last year.
However, International human rights bodies have been critical of the Indian government’s strong-arm response to the J&K insurgency. For instance, a report released by Amnesty International last September offered a damning indictment of the Modi administration, stating: “The Indian government has drastically intensified the repression of rights in J&K in the three years since the change in status of the region.”
The government has taken umbrage at such reports and touted an unprecedented surge in tourism as a growing indication of normalcy being restored in the troubled region. According to the government’s latest figures, 120,000 visitors arrived in Kashmir last month. Last year, a record 2.5 million visitors, an unprecedented number in the past four decades, braved the threat of violence and traveled to Kashmir. Such numbers provide a massive impetus to the tourism industry in the valley.
Past run-ins with the NYT
The Modi administration has run afoul of the NYT before, such as in a piece published last year titled ‘The New India: Expanding Influence Abroad, Straining Democracy at Home’. “It is India’s credentials as the world’s largest democracy that Mr. Modi rides on the global stage. But at home, diplomats, analysts, and activists say, Mr. Modi’s government is undertaking a project to remake India’s democracy unlike any in its 75 years of independence – stifling dissent, sidelining civilian institutions and making minorities second-class citizens,” the piece said, provoking an angry response from Indian Minister of External Affairs Subrahmanyam Jaishankar, who accused the newspaper of biased coverage.
Similarly, another controversy erupted after the NYT reported that India had bought the Israeli spyware Pegasus in 2017 as part of a $2 billion defense package to snoop on critics of Modi. In April 2022, the publication again stirred a hornet’s nest over India’s reluctance to make its Covid-19 death toll public, suggesting that the actual casualty count was far higher than initially estimated. The report claimed that an ambitious effort by the World Health Organization (WHO) showed that more than 15 million people died globally due to the pandemic.
“More than a third of the additional nine million deaths are estimated to have occurred in India, where the Modi government has stood by its own count of about 520,000.” However, the NYT’s claims based on the WHO data were debunked by the Indian government as having used flawed methodology.
Domestic media tamed, foreign media next?
A vast section of the domestic media has been in awe of the Modi regime and has capitulated under its “authoritarian rule,” according to the shrinking group of liberal publications, which have kept up their resistance up despite their meager resources and limited reach.
The PM, who has belittled the importance of media and prefers communicating directly with the masses through his weekly radio show Mann ki Baat, which loosely translates as Point of View, or via Twitter, has not held a single press conference since assuming power nine years ago. His 86.9 million followers on Twitter make him one of the most popular leaders on social media. Perhaps this mass appeal explains his lack of interest in media attention.
India’s domestic media has fallen in line and remains among Modi’s most ardent cheerleaders. It’s a redux of India’s 22-month emergency rule during Indira Gandhi’s tenure between 1975 and 1977, when the Indian media were famously said to have “crawled when they were only asked to bend.” The PM has used the domestic media to stellar effect to amplify his thoughts and deeds, which many journalists are happy to do while forgoing the expected tasks of asking questions and demanding accountability, likely for fear of reprisal.
A Western media bias or a changing India?
India’s place at the global table has changed irrevocably since 1991, when the economic liberalization began, giving Western powers access to one of the biggest markets in the world. It was a different era back then – one in which India’s politicians and intelligentsia did not worry themselves silly over how the Western media portrayed the nation, which was on the cusp of momentous socio-economic change. The Western media’s utterances were at times far removed from reality due to its sheer ignorance of a country as complex as India. And they were no longer considered the gospel truth. Self-belief gradually blossomed as India’s economic boom became a global talking point.
Unlike the domestic press, however, the foreign media is under no obligation to be under the government’s thumb. The latest fracas with the BBC is a case in point. To make matters worse, the Modi regime has made it increasingly difficult for foreign journalists to cover India objectively.
Newslaundry.com, a private media watchdog that was founded in 2012, before Modi came to power, reported last month that “every second foreign correspondent has been summoned by the government to explain their reportage critical of ministries. Since August 2019, almost no one has been allowed to visit J&K and report independently there. And journalists who write ‘negative stories’ are given visas valid for less than a year, putting their jobs at stake.”
As the PM is being slammed for going after the foreign media after silencing critics back home, some of the bad press that he has received defies belief – Modi’s India has been compared to Nazi Germany and called a place where tyranny is winning against ‘global democracy’, among other assertions. And if the current trend persists, Modi may continue to be the darling of the Indian masses, but a pariah to foreign media.
This may not be such a bad deal for him, however, both at home – where he is eyeing a third consecutive term as PM next year – and abroad, where world leaders are keen to remain India’s partners to retain access to its huge market and geostrategic opportunities, even as various pro-democracy NGOs downgrade India to various levels of ‘non-free’ or ‘autocratic’ status.
But before the Western media versus Indian nationalism debate sparks off a raging debate on the country’s TV channels that go to war with Pakistan and China every other evening to stay afloat in the cut-throat ratings business, it’s high time to step back and ponder: who has changed since the Modi regime came to power? Has the country’s social fabric changed from the pre-Modi era or is it that the Western media has been serving ‘manufactured’ news and views? The truth is likely somewhere in between. And there is no easy answer in the prevailing debate.
Ellen Brown: The Looming Quadrillion Dollar Derivatives Tsunami
By Investment Watch Blog
via scheerpost:
Technically, the cutoff for SIFIs is $250 billion in assets. However, the reason they are called “systemically important” is not their asset size but the fact that their failure could bring down the whole financial system. That designation comes chiefly from their exposure to derivatives, the global casino that is so highly interconnected that it is a “house of cards.” Pull out one card and the whole house collapses. SVB held $27.7 billion in derivatives, no small sum, but it is only .05% of the $55,387 billion ($55.387 trillion) held by JPMorgan, the largest U.S. derivatives bank.
The global derivatives market is a $2+ QUADRILLION (2,000+ TRILLION) ticking time-bomb. When banks fail, derivatives won’t just unwind in an orderly fashion. Few people understand this.
These are some of the top U.S. banks ranked by derivatives exposure (double-digit TRILLIONs). pic.twitter.com/cS23fazqZH
The Bank of International Settlements estimates that there is a combined $52+ Trillion off balance sheet Dollar-denominated debt among non-banks outside of the U.S. and non-U.S. banks. In case of non-orderly derivatives wind-downs this could become extremely problematic. pic.twitter.com/x5IhFCnUsX
Credit Suisse’s $39 Trillion Derivative Debt Poses Significant Threat to US Financial System.
The U.S. Treasury Secretary, Janet Yellen, is under a lot of pressure due to the deteriorating condition of Credit Suisse, a Swiss banking giant. Under the Dodd-Frank financial reform legislation of 2010, Yellen was given increased powers to oversee financial stability in the U.S. banking system. The legislation made Yellen the Chair of the newly created Financial Stability Oversight Council (F-SOC), whose meetings include the heads of all of the federal agencies that supervise banks and trading on Wall Street. It is Yellen’s authorization that would be required before the Federal Reserve could create any more emergency bailout programs for mega banks.
Recently, the US Treasury was reviewing US banks exposed to Credit Suisse, looking into how many billions of dollars of underwater derivatives US banks were on the hook for as a counterparty to Credit Suisse, and U.S. banks exposure to Credit Suisse’s other major counterparties that U.S. banks do business with.
Credit Suisse was making headlines for two years, and serious problems at Credit Suisse have raised alarm bells in the US financial system. Credit Suisse is a global, systemically significant, too-big-to-fail bank that operates in the US and is deeply interconnected throughout the global financial system. Its failure could have widespread and largely unknown repercussions, which is why the US financial system and economy need to be adequately protected.
The recent revelations about Credit Suisse’s deteriorating state have raised concerns about contagion risks in the banking industry, particularly in light of the staggering amount of secret derivative debt being held by foreign banks. According to a report by the Bank for International Settlement, this unreported exposure is 10 times greater than their capital, with an estimated $39 trillion of dollar debt held off balance sheets.
This poses potential threats to dollar swap lines and with a significant portion of derivative trades still not being centrally cleared, a layer of opacity is added to an already unaccountable system. The quarterly derivatives report from the Office of the Comptroller of the Currency found that four US mega banks held 88.6% of all notional amounts of derivatives in the US banking system, with a total notional amount of $195 trillion.
UCSF Orders Their Doctors to Ignore COVID Vaccine Injuries
By Steve Kirsch
They don’t file VAERS reports either. That’s a violation of federal law. I had a bunch of questions for their media relations department, but they ghosted me. Here’s what I wanted to know.
Dr. Josh Adler is executive vice president and chief clinical officer at UCSF Health as well as vice dean for clinical affairs at the UCSF School of Medicine. I wondered if he would like to see these questions answered as well. So I asked him.
Executive summary
I sent a list of questions to UCSF media relations on March 20 at 10am PST. I also emailed and called the head of media relations at UCSF to let her know about my questions.
Their response: silence.
You know what that means, don’t you?
The questions I sent them
The UCSF Chief Medical Officer has issued a verbal directive that medical staff (doctors, nurses, techs, etc.) are specifically instructed NOT to associate the COVID vaccine to any injuries. So even if they believe the vaccine caused the injury they are NOT allowed to talk to the patient about it. Can you explain how this is in a patient’s best interest? World health authorities such as Karl Lauterbach, Federal Minister of Germany for Health, have publicly admitted that the rate of severe vaccine injury is 1 in 10,000 and the V-safe data in the US shows the rate of severe injury (requiring medical care) is actually 100X higher: 8 SEVERE INJURIES per 100 fully vaccinated people. So why is the UCSF medical staff forbidden to make an association??
I’ve been told that the staff are told not to ask if the person was recently vaccinated with the COVID vaccine because that would suggest to the patient that the COVID vaccine might have caused their medical condition. Is this true? So the patient must offer it to the doctor because the doctor isn’t allowed to ask? How does that improve clinical outcomes?
I’ve been told that 70% of the Radiology Department (in Marin specifically) requested and were granted religious exemptions after seeing what happened to people who received the COVID vaccine. If it wasn’t 70%, what is the number?
I’ve been told that the placentas of a majority of vaccinated women who give birth are not normal (calcified, blood clots, etc.). This started happening after the shots rolled out. Can you tell me what percentage was observed and why nobody at the hospital is speaking out to the press about this situation?
Most troubling to me is that I was not able to find anyone who currently works at UCSF (including doctors, nurses, and lab techs) who would talk to me on the record for fear of being fired. Why would these doctors and nurses have such a fear? Will you guarantee in writing that any staff member who speaks out about any of the points above will be protected and not be fired just for speaking out? Have you fired anyone for speaking the truth? Who?
With all the chatter about fear and intimidation tactics, have you issued WRITTEN assurances to the staff that 1) it is OK to ask about COVID vaccine status, 2) that it is OK to write vaccine exemptions when warranted such as allergic reactions, 3) that if they believe the vaccine caused an injury that they are free to talk about it with the patient and 4) that staff members who talk publicly about what they are seeing in the clinic with respect to vaccine-associated injuries/deaths and don’t violate any confidentiality/HIPAA rules will be protected from being fired? I want to know whether TRUE speech is protected and whether UCSF has notified staff of this in WRITING. If not, why not? Do fear and intimidation tactics yield better health outcomes?
My friend Tim Damroth told me he suffered a cardiac arrest 2 minutes after getting his first COVID shot. He was in such pain since the shot that his UCSF doctors prescribed a nerve block shot. But in order to get the nerve block shot, UCSF required him to be fully vaccinated (i.e., 2 shots)! He asked for a vaccine exemption, but the UCSF doctors told him that UCSF doesn’t allow them to write any vaccine exemptions, even for people who almost died after getting the shot. So Tim got another shot in order to get the medical care he needed but this made his pain much worse. Can you confirm whether COVID vaccination is still required to get certain medical care at UCSF? If it isn’t still required, when did the requirement end? Can you explain the rationale for requiring vaccination to give a shot? Do you deny treatment to people with life threatening conditions if they are not fully vaccinated? How vaccinated must they be to be treated? 2 shots? 3 shots? I just talked to Tim and he will be delighted to sign a HIPAA consent to allow UCSF to talk about his case and all his medical records publicly so everyone can learn what happened to him. Are you proud of the way he was treated? Do you have any regrets?
If you believe that COVID vaccine and masks are effective, why would you subject a patient to have to be vaccinated before receiving medical care? This is nonsensical in light of the Cleveland Clinic study which clearly showed that vaccines increase risk of getting COVID which would seem to put the staff at higher risk. You are clearly ignoring that study. On what basis? Nobody has been able to debunk the study. The precautionary principle of medicine requires that you hold off your vaccine requirement until you can resolve the ambiguity.
How many UCSF staff have died within 6 months of receiving a COVID vaccine shot? Were autopsies done? Did they do the histopathology studies to rule out the COVID vaccine as a cause of death? Can we see the slides?
How many UCSF staff have been seriously injured from the COVID vaccine?
Why didn’t any doctor at UCSF file a VAERS report on the vaccine injuries of , Jan Maisel, and Angela Wulbrecht. This is required by law. was a former Chief Medical Officer at UCSF. Maisel is Associate Clinical Professor of Pediatrics at UCSF. Wulbrecht was a top UCSF nurse. All of their injuries were required by law to be reported, yet no VAERS reports were filed. Why not? What are you doing to correct the problem?
UCSF ultrasound technicians with decades of experience have seen an unprecedented number of menstrual irregularities in women who have been vaccinated. Why aren’t any of them warning the public about this? Is the public better off if nobody knows about this?
I talked to one of the funeral homes used by UCSF. They are seeing a 20X higher rate of perinatal deaths after the COVID vaccines rolled out. This is a disaster. Why isn’t anyone saying anything about this? Why did the funeral director decline to be named for fear of being fired? Why isn’t UCSF just publishing the numbers to warn the community? How does keeping this information secret result in superior clinical outcomes?
Nearly all of the UCSF neurologists know that the COVID vaccines have caused serious injuries to huge numbers of UCSF patients. Can you explain why none of them are speaking out publicly about what they are observing in the clinic?
Why not make public health information from the hospital public? The information can be easily anonymized to protect privacy. Wouldn’t making medical records such as age/admission date/COVID vaccine dates/reason for admission be a huge public service? If the vaccine really works, everyone would know it. If the vaccine doesn’t work, everyone would know it. Why don’t we have data transparency?
Is anyone at UCSF calling for data transparency from the CDC? If the death-vax records were public, we could instantly know whether the shots are beneficial or harmful. Is there a reason these records are not public and nobody at UCSF is calling for these records to be made public? Do we get better health outcomes when the CDC keeps the data from public view? The data can be easily anonymized to satisfy any HIPAA requirements. I personally released a subset of the death-vax records from Medicare. So I know it can be done. Oh, and it showed the vaccine were causing an enormous amount of excess deaths.
How long do you think you can get away with hiding all these vaccine injuries from public view?
Is this really in the public interest to keep all this stuff secret and engage in fear and intimidation tactics? Is there a paper in a peer-reviewed medical journal showing superior patient outcomes when the public is kept in the dark about vaccine injuries?
Additional actions
On March 20 at 9:50pm I sent this email to Dr. Adler and cc’ed his assistant:
Summary
These should be easy questions for UCSF to answer, but they are ducking my questions for some reason. I just can’t figure it out. I don’t want to spread misinformation, and I’ve offered to correct any questions if they will supply evidence that I’m wrong, but all I hear is silence.
It’s not just me who wants answers to these questions. Pretty much all my readers want to know the answer too.
More importantly, I’d guess that most of the people who work at UCSF would want to know the answer to these questions as well.
But apparently UCSF management and the mainstream media don’t think any of these questions are important.
I wonder if any members of the UCSF Health Leadership Team are curious about the answer to any of these questions. And if not, why not? Do all of them think secrecy is the best way to go? Which questions do they not want to have answered and why? I’ve emailed Dr. Adler and I hope he will respond.
They can’t keep running from the truth. The longer they avoid answering these questions, the worse they look.
Some day there will be accountability. You can bank on that.
Government-backed Digital Money to Represent $213B in Payments by 2030
By Lucas Mearian
Digital currencies backed by government banks still face a mountain of challenges before they’ll be ready for prime time, but 114 countries are involved in various projects, either in the planning stage or all-out pilots.
The global value of central bank digital currencies (CBDCs) will grow dramatically from $100 million today to $213 billion by 2030, once the virtual money gains greater adoption for domestic payments, according to new data from Juniper Research.
By 2030, 92% of the total value transacted through CBDCs around the world will be paid domestically, as cross-border payment systems face an uphill battle for adoption, Juniper predicted.
The digital currency, which is backed by traditional fiat cash such as the US dollar or British pound, can bolster financial inclusion because customers don’t have to have a bank account to hold them; they can instead use encrypted “digital wallets” that exist in the cloud, on a desktop or laptop, or even on USB storage device.
With a cross-border CBDC payment system, immigrants, for example, could send money back to their countries of origin without having to pay what can be exorbitant fees for electronic money transfers. Businesses would also be able to make cross-border payments for goods and services with much cheaper, and faster, settlements.
Central-bank-backed digital currencies would also reduce the costs of printing and replacing mone, help improve fraud detection, and allow money paid to scammers to be more easily traced and recovered, according to Lou Steinberg, former Ameritrade CTO and managing partner at cybersecurity research firm CTM Insights.
“It would simplify and speed up cross-border payments and reduce the cost and complexity of processing checks, wires, etc.,” Steinberg said in an email reply to Computerworld. “Unlike cryptocurrencies such as bitcoin, a currency that is backed by the full faith and credit of the United States or other trusted government would provide certainty that the value of the currency is being carefully managed. A government can adjust everything from the money supply to interest rates as they manage and maintain the value of a fiat currency.”
Digital currencies also eliminate the anonymous nature of consumer cash transactions. In places such as China, where spending activity is closely monitored, that would let the government know what movies an individual is buying tickets for of whether they are spending money at a bar. Those are hard to track with cash.
The US has been a slow follower compared to other nations, such as China and its digital Yuan, in developing a CBDC. Australia, China, Thailand, Brazil, India, South Korea and Russia already have pilots or will begin test programs this year. By 2030, the Bank of England and UK Treasury are planning to launch a digital pound or ‘Britcoin’ CBDC.
It matters which nation’s digital currency achieves widespread adoption first because that government will be able to set the global rules for most others, according to Steinberg. “Whomever sets up large international payment systems first will have a de-facto standard, one which latecomers will have to adopt,” he said. “The US continues to study a digital dollar while others are making progress. We need to prioritize a system for international payments and settlement based on a digital dollar, almost the equivalent of a next-generation SWIFT network.”
The features and standards can be used to design in privacy or state surveillance and traceability. They can include limited use currency, such as a type of dollar that could only be used for stimulus but not saved, or a digital dollar food stamp.
“On the other hand, countries like Cuba have two types of currency, and limit the use of one type to foreigners only (so they know which of their citizens are collecting money from foreigners),” Steinberg said. “If we want western standards around privacy, we need to set the standards. If we want the dollar to maintain its role as a ‘reserve currency,’ we need to set the standards around cross-border networks. Showing up late to the game means you play by some else’s rules.”
All together, 114 countries representing 95% of global GDP are investigating the creation of CBDCs, according to the Atlantic Council, a Washington-based think tank. Only 10% have launched general CBDC networks. Sixteen percent of projects are in pilot stage, 30% are in development, and 27% are still in the research stage, according to the Atlantic Council.
“We are behind. The good news is that we are starting to realize this,” Steinberg said of the US.
This map by the Atlantic Council shows the maturity of CBDC projects around the globe.
In March 2022, for example, US President Joe Biden issued an executive order calling for more research on developing a national digital currency through the Federal Reserve Bank, or “The Fed.” The order highlighted the need for more regulatory oversight of cryptocurrencies, which have been used for nefarious activities such as money laundering. The Fed has been investigating the creation of a CBDC for years.
US lawmakers have also introduced bills that would allow the US Treasury to create a digital dollar. The electronic dollar would allow people to make payments using tokens on mobile phones or through cards instead of cash.
In November, the New York Federal Reserve Bank began developing a wholesale CDBC prototype. Named Project Cedar, the CBDC program hammered out a blockchain-based framework expected to become a pilot in a multi-national payments or settlement system. The project, now in phase 2, is a joint experiment with the Monetary Authority of Singapore to explore issues around the interoperability of the distributed ledger.
Juniper Research’s Maynard believes China will lead both domestic and cross-border CBDC use in 2030, “as it has had early pilots which have seen some success in the market.”
Since CBDCs are issued by central banks, they will be mainly targeted at domestic payments at first, with cross-border payments arriving as systems become established and links made between CBDCs used by individual countries. Crucial to CBDC success, however, will be cross-border and retail merchant acceptance.
CBDCs will also require a complex regulatory framework including privacy, consumer protection, and anti-money laundering standards, which need to be made more robust before adopting the technology, according to the Atlantic Council. Any new system of payment could also jeopardize the national security objectives of the country using them.
“They can, for example, limit the United States’ ability to track cross-border flows and enforce sanctions,” the group said. “In the long term, the absence of US leadership and standards setting can have geopolitical consequences, especially if China and other countries maintain their first-mover advantage in the development of CBDCs.”
Steinberg agreed, saying a fully distributed system has risks, “both that wallets will be electronically pick-pocketed, and that transaction validity (consensus) can be cheated. A well-designed system could be quite secure today and future proofed. A poorly designed one would lead to widespread theft and fraud,” he said.
The research by Juniper said to date there is still lack of commercial product development around CBDCs, with few well-defined platforms for central banks to leverage — a big limiting factor for the current market.
“While cross-border payments currently have high costs and slow transaction speeds, this area is not the focus of CBDC development,” said Nick Maynard, Juniper’s head of research. “As CBDC adoption will be very country specific, it will be incumbent on cross-border payment networks to link schemes together, allowing the wider payments industry to benefit from CBDCs.”
For success, any CBDC platform would need a full end-to-end financial network, including wholesale capabilities, digital wallet, and merchant acceptance, Juniper said.
Full end-to-end CBDC solutions, including wholesale capabilities and – most importantly – widespread merchant adoption central banks to generate buy in. That will mean leveraging platforms from experienced payments vendors, as well as having a public consultation model which involves key stakeholders at every stage.
“In order to achieve merchant adoption, it’s a chicken or egg scenario to an extent,” Maynard said. “Merchants will want to use the platform users are transacting in, but users will want to use the platform their favourite merchants and brands are on. As such, it will likely require a mix of incentives at both the user and merchant level to generate initial traffic.”
One of the challenges for central banks is figuring out how to enable a CBDC that adds value above existing payment systems, according to Gartner Research. The success of CBDCs also depends on “programmability” enabled by smart contracts, Gartner argued in a January report.
“In order to further justify investments into CBDCs, developers are experimenting with injecting programmability into CBDC-enabled payment value chains,” Gartner said. “Therefore, bank CIOs need to prepare for this transformation,”
As part of ongoing pilots of the digital Yuan, or e-CNY, for example, the Bank of China Chengdu is using smart contracts to manage the deposits for extracurricular school activities, such as field trips to museums. Using the e-CNY CBDC reduces reliance on third parties to deal with a refund if a class is canceled, or a student couldn’t attend, Gartner said.
Countries such as Russia and China see how payments that depend on US infrastructure and currencies can be affected by sanctions and are working to develop alternatives, Steinberg said.
“The one to watch is China,” Steinberg said, referring to the mBridge Project. “Domestically, they need to keep electronic payments from all moving to tech companies, and undoubtedly see benefits in increased consumer surveillance. Internationally, they piloted cross border payments and settlement with central banks in places like Thailand and UAE. That’s the current concern.”
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