Why is a digital currency from our Government a worrying prospect?
Well, imagine that everything you earn, everything you spend – when, where and how – is tracked by Government and who knows who else (basically Big and Small Tech) without your knowing anything about it?
Not only that, but with a national digital currency, at any moment the Government can ‘disappear’ your money. It is possible for them to create money that has to be spent within a certain time – you can’t store it.
Does that worry you? It should. There’s more too!
- What is the Government proposing?
- What is wrong with a national digital currency?
- What can I do to stop a national digital currency?
In January, the Bank for International Settlements announced that the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank would work together to work out how they could create national e-currencies in their respective countries.
The Treasury and the Bank of England have created a task-force to look into this for the UK. This national digital currency – or Central Bank Digital Currency (CBDC) – would initially work alongside current cash and card payments but ultimately replace them.
The task-force is supposed to ensure a strategic approach and connect up various Government agencies as they consider the possibility of setting up a central bank digital currency (CBDC)
They haven’t decided whether to actually create a national digital pound, they’re just looking into it (they say).
A CBDC would be a new form of digital money issued by the Bank of England for use by individuals, families and businesses. It wouldn’t replace cash and bank deposits (yet) but, they claim, it would exist alongside them.
The task-force will be co-chaired by the Bank of England’s deputy governor, Jon Cunliffe, and Katharine Braddick, director-general of financial services at the Treasury.
Importantly, part of its role will be to monitor developments overseas (in particular China, I suspect) “to ensure that the UK remains at the forefront of global innovation on digital currencies” they say.
Part of the idea is that a new digital currency would make Britain more attractive to overseas partners post-Brexit. I’m not sure how that would happen. Merely having a digital currency wouldn’t necessarily make our goods and services more attractive, unless it can be proved that payment systems would be smoother and quicker that way.
Ha! What’s right with it?!
The fundamental issue, of course, is that it would bring in YET MORE surveillance of us; our spending, our earning and our activities generally.
Right now, every time we use a credit or debit card, pay with our phone or do a bank transfer, our activities can be monitored. Only cash and crypto payments are anonymous.
You might think that that’s not a problem – that you are an honest citizen so you have nothing to fear. Fair enough.
china’s doing it – that’s worrying enough
China is first in the central bank digital currency (CBDC) race – not surprisingly given its digital dictatorship -but it won’t be last. Many nations are exploring the idea. And the consequences could be dire for citizens..
CBDCs, which are loosely based on cryptocurrencies, make it possible to replace a country’s entire financial system with a single Government bank. This central authority (remember cryptocurrencies have no central authority) will handle all transactions in the economy without any checks and balances from outside… because there is no outside.
Cryptocurrencies work on a system of anonymity but a CBDC would be anything but anonymous. ALL of your transactions would be connected to other aspects of your life – your addresses, your health records, your credit score, your police record etc. That’s how it works in China.
Basically, you give up your life to the machine.
your money is not your own anymore
One problem with a purely digital currency is that it cannot be physically withdrawn. Even if the economy tanks and central banks cut interest rates to below zero, you still won’t be able to withdraw your money because it doesn’t suit the central bank to allow you to do that. You will simply be forced to spend it in order to get some sort of value out of it.
A CBDC also enables the Government to tax you at source as they can get directly at your money. They will also be able to track and trace every single penny you earn and spend and possibly add in some sales or VAT tax as you spend.
your money can disappear
This digital currency is quite different from cryptocurrencies as crypto is decentralised – there is no central authority ratifying transactions – while a national digital currency would be entirely centralised and totally under the control of the Government.
However, it can bring in some clever elements of crypto including some form of ‘smart contracts’ that could be written into the digital code of some or all of your money which would create rules for spending and saving it. So, for example, it could create money that has a time-limit which meant you had to spend it within a certain time-frame or you would just lose it.
Doesn’t this idea just get. better and better!?
The comedian and economist Dominic Frisbee explains CBDCs rather neatly here…
Interestingly, Nick Hubble of the ‘Fortune and Freedom’ newsletter quotes Lenin’s description of a government’s central banking system to explain where the idea of CBDCs comes from. He says: “Lenin, strangely enough, explained the consequences of central banks and their digital currencies: ‘A single State Bank, the biggest of the big, with branches in every rural district, in every factory, will constitute as much as nine-tenths of the socialist apparatus. This will be country wide book-keeping, country-wide accounting of the production and distribution of goods, this will be, so to speak, something in the nature of the skeleton of socialist society. We can “lay hold of” and “set in motion” this “state apparatus” (which is not fully a state apparatus under capitalism, but which will be so with us, under socialism) at one stroke, by a single decree ‘
“This paragraph sometimes gets misquoted as the establishment of a central bank being 90% down the path to communism. Which, I think, is a fair enough claim, by the way. Money is half of every transaction and the interest rate is the opportunity cost of spending your money. So, by setting interest rates, central banks are engaging in central planning of almost the entire economy.
“But here’s the real point that Lenin makes, which can be applied to CBDCs too: governments are exhibiting communist like levels of control over our economies via the monetary system. CBDCs are a communist’s dream because of the level of control they make possible. They could achieve “country wide book-keeping, country-wide accounting of the production and distribution of goods” which could bring about “as much as nine-tenths of the socialist apparatus” in the form of central planning.”
We have to stop it now.
- This is the sort of thing you need to complain about NOW to your MP. Find your local MP here and write to them.
- Write to newspapers and comment on articles (like this one) expressing your alarm and disgust at the very idea of a national digital currency run by central Government.
- Also, insist on using cash more and more rather than less and less. As I point out in this article about the encroaching cashless society, we have to use cash and insist on local shops and businesses taking it to protect our privacy and liberty. It really is that serious!
Join the revolution. Refuse a national digital currency.