  We consider the discrete Knizhnik-Zamolodchikov connection (qKZ) associated
to $gl(N)$, defined in terms of rational R-matrices. We prove that under
certain resonance conditions, the qKZ connection has a non-trivial invariant
subbundle which we call the subbundle of quantized conformal blocks. The
subbundle is given explicitly by algebraic equations in terms of the Yangian
$Y(gl(N))$ action. The subbundle is a deformation of the subbundle of conformal
blocks in CFT. The proof is based on an identity in the algebra with two
generators $x,y$ and defining relation $xy=yx+yy$.
