A few weeks ago, European Central Bank president Christine Lagarde gave a private interview to Ukrainian president Zelensky. Well, it turned out to be a prankster impersonating Ukrainian president Zelensky. And the interview was published online. You can watch the amusing video here.

Today, I want to analyse in detail what Lagarde actually said. There were several crucial revelations, especially about central bank digital currencies (CBDCs) in the midst of the snarky questions. But first, a quick reminder about Lagarde herself…

Let’s not forget Christine was criminally convicted of financial negligence for her time as French finance minister. By the time the law caught up with her, she’d been promoted to the head of the International Monetary Fund (IMF), in which capacity she immolated Greece in order to save the euro according to the IMF’s own watchdog.

By the time she’d finished destroying the Greek economy, she was ready to go on to lead the European Central Bank (ECB), as she does today. In which capacity she engineered an inflationary bonfire not seen by my German family since the 50s.

Her next plan is to launch a CBDC. What could possibly go wrong?

The controversy is all about whether governments will use CBDCs to impose certain policies (something we’ve been highlighting for some time). Things like limits on spending, forced spending, limits on what you can spend your money on, items you must buy, taxes, subsidies and anything else politicians might dream up.

What makes CBDCs special is their ability to actually implement and enforce such absurd policies effectively. But let’s focus on what Lagarde actually said to fake Zelensky about CBDCs first.

After emphasising that the ECB’s decision on launching CBDCs will be decided this October, Lagarde explains what they’re supposed to achieve:

The reason I’m personally convinced that we have to move ahead [with a CBDC] is a situation like the one we are in now. We are dependent on the supply of gas by a very unfriendly country. I don’t want Europe to be dependent on an unfriendly country’s currency, for instance, I don’t know, you know, the Chinese currency, the Russian currency, the whatever. Or dependent on a friendly currency, but which is activated by a private corporate entity like, you know, Facebook, or like Google, or anybody like that.

This is a bit odd. I don’t see how yuan or rouble might be used in the eurozone. Unless the euro’s inflation continues to get worse and Europeans start using foreign currencies again, as they did in the 20s…

Can’t the euro compete with currencies run by China and Russia? It must be very badly managed…

Fake Zelensky goes on to point out that, “There are many protests in Europe against the electronic euro. What is the reason?”

Lagarde’s answer simply states that some people are also in favour of it. She doesn’t mention European citizens’ concerns. But then she repeats her own concern:

As I said, I don’t want Meta, Google or Amazon to suddenly come up with a currency that will take over the sovereignty of Europe. I don’t want a foreign currency to become the currency of trading within Europe. So we have to be ready.

The euro must be in really bad shape if the head of the ECB is worried that private company money will commandeer the sovereignty of the EU!

But fake Zelensky notices she didn’t answer the question. Why are people protesting against CBDCs in Europe? According to fake Zelensky, “The problem is they don’t want to be controlled. They don’t want to.”

The criminally financially negligent Lagarde’s reply is where things get interesting:

Yeah, but you know what? Now we have in Europe this threshold above 1000 euros you cannot pay in cash. If you do, you are on the grey market. You take your risk. You get caught, you are fined, or you go in jail.

But, you know, the digital euro is going to have a limited amount of control. There will be control, you are right, you are completely right.

We are considering whether for very small amounts, anything that is around 300, 400 euros, we could have a mechanism where there is zero control.

But that could be dangerous. The terrorist attacks on France back 10 years ago were entirely financed by those very small anonymous credit cards that you can recharge in total anonymity.

Let’s consider what all of this means…

First of all, I’d like to ask, would Lagarde have been arrested more quickly and imprisoned successfully if she had conducted her illegal payments in European CBDCs while French finance minister? Presumably the payments would’ve been surveilled, discovered and flagged better under a CBDC system?

Secondly, it sounds like the ECB has decided on launching a CBDC, October or not…

Thirdly, the issue of control is stated clearly. There will be control of the euro CBDC. The details are up for grabs. There might not be for small transactions, if you consider 300 euros to be small, but that could always change later. Just as they could change the “limited control” to “complete control”.

Fourthly, Lagarde’s admission that it is possible to use cash to avoid government controls is not a rebuttal of the issue of control, but proves the point. If governments want to control small CBDC transactions, they could. They can only make laws to that effect about cash, with pathetic levels of actual enforcement.

The ability to make a law and to enforce it is what separates cash from CBDCs.

If the government lowered the cash transaction limit to 50 euros, people would simply ignore it. If the government lowered the CBDC transaction limit to 50 euros, you would not be able to use it for larger transactions. It simply wouldn’t work.

This means that arguing about what laws are on the books is missing the point. It’s the enforcement that matters when it comes to CBDCs.

You see, historically speaking, government policies don’t exactly work. People use cash payments to remain in the black market to avoid tax. People don’t comply with Covid policies either. English people get drunk in a pub, Australian children fail to wear bicycle helmets, and Germans dare to jaywalk. All of this is illegal, and yet, it happens because enforcement is patchy.

What makes CBDCs different is entirely unique and it has never happened before. We’ve come close, but nothing quite like this.

For example, most people’s income tax is not received by the taxpayer and then paid to the government. Instead, it is automatically deducted by the employer.

That’s a much higher level of enforcement than asking people to pay their own tax.

CBDCs offer the next level up. Because, in that example, the employer is the one doing the transacting and withholding via the banking system.

What CBDCs do is give the government direct control over your money. It’s like being able to push a button and bicycle helmets magically appear on all Australian children on a bike, people trying to jaywalk are glued to the ground until they get the green light and the alcohol evaporates out of your glass at the pub once you’re drunk. Under CBDCs, the policy and its successful implementation are one and the same thing. What governments decide about money actually happens. Dare I say it, government policy would actually work!

Of course, governments promise not to actually do many of the policies I’m worried they will. But the Titanic wasn’t sinking when it was boarded by passengers and the income tax didn’t apply to much of the population when it was created.

Crises that justify new policies and creeping authoritarianism are the issue. And if you really think that a currency which can be controlled by government won’t be controlled by government then you’re reading the wrong newsletter.

That’s doubly true if you think laws against abusing CBDCs will be passed to stop governments. Arguing a law constrains a government is like saying a carpenter won’t cut wood to make a cabinet. It’s their job.

All this, of course, is just the latest confirmation that CBDCs are really about control. It’s nothing new, as we exposed here, when one of Lagarde’s American colleagues admitted as much.

For three years now we’ve been warning about CBDCs. For the longest time, we were dismissed as conspiracy theorists. Then people began to claim the currencies wouldn’t be used as we fear. Now we have clear admission that the controls will be there even upon launch, it’s just a question of how many.

Now that the threat is real and undeniable, you might be wondering what you can do about it. Well, we’ve had three years to think about that. And this is what we came up with. 

But you know what? The real news embedded in the video wasn’t about CBDCs at all. It was about something far more important. A glaring omission from a long list of currencies which Lagarde repeatedly says she doesn’t want to be beholden to.

She doesn’t want to be beholden to privately issued money like that from Facebook, Meta or Amazon.

And she doesn’t want a foreign currency like China’s or Russia’s.

Which one didn’t she mention? The one which the EU conducts half its trade in…

That will be covered in the upcoming issue of The Fleet Street Letter. To subscribe now and discover what to do about CBDCs today, click here.


Nick Hubble
Editor, Fortune & Freedom