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Friday, March 1, 2024
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HomeCulture WarsWho will benefit from digital currency? Not the public

Who will benefit from digital currency? Not the public

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YEAR after year, legislation is passed or systems are changed for no apparent reason and without any public debate. One such intrusion that’s coming down the road at speed is the Central Bank Digital Currency.

It will be argued that as cheques have mainly had their day and cash isn’t far behind, further simplifying payments is the way to go. A large proportion of the public already use credit cards and phone apps to pay for goods and services. Many of us use online banking.  But we still pay for ‘odd jobs’ and so on in cash. Cash provides people with the ability to transact with one another without recourse to any other authority, and with high levels of privacy. It all works perfectly well. However if the banks and various political and financial organisations have their way, we will be compelled to carry out all transactions in a completely traceable way.

Let’s consider how today’s system works. You offer your card to the cashier and once your bank has confirmed your ability to pay the electronic transfer of funds is registered. No one else knows what you have purchased – all that is recorded is the supplier’s name and the amount you spent. At the end of each day all those millions of transactions are reconciled by the parties involved. It is a clearing operation that has gone on in one form or another since banks came into being.

Then we start to hear about a Central Bank Digital Currency. The Central Bank, the Bank of England, will become the sole clearing bank, with commercial banks reduced to the role of agents. Anonymity will disappear, and each and every transaction will be identifiable in every detail back to that individual or corporate entity.

The Bank of England and HM Treasury have created a joint taskforce to explore the potential of a ‘retail’ CBDC. This would be a form of electronic money issued by the Bank of England which could be used by households and businesses to make payments.

Such a development would have far-reaching consequences for households, businesses, and the monetary system and may pose significant risks depending on how it is designed. These risks include state surveillance of people’s spending choices, financial instability, an increase in central bank power without sufficient scrutiny, and the creation of a centralised target for a hostile nation state or criminal activity.

The overall conclusion of a House of Lords report suggests we have yet to hear a convincing case for why the UK needs a retail CBDC. The question we must ask is: To what problem is a CBDC the answer? To put it another way, if it ain’t broke, why does it need fixing?

With full implementation, physical cash would become obsolete.  A timeframe could be set for all our monetary assets to be converted into a digital currency where funds in an online account will be accessible only via software (an app) provided by the Bank of England or an agent bank. But before a full CBDC system could be achieved, a joint venture including money already invested elsewhere will exist. Should instability occur in the markets we could well find people transferring large sums between existing financial services companies to CBDC in order to hedge the market, causing feverish activity and even panic should there not be sufficient investments left in place for pensions or other long-term liabilities.

While there are design options that would provide some privacy safeguards, technical specifications alone may be insufficient to counter public concern over the risk of state surveillance. The Bank of England risks being drawn into controversial debates on privacy and data protection. Moreover, at the end of 2019 there were around one million people in the UK without access to a bank account, either by choice or because they cannot use the necessary technology. What is their status to be?

Included within this whole exercise is a desire by some for the introduction of a digital passport that contains all the personal information already gathered by the state and the NHS, which could be sold to private companies in the name of ‘keeping us safe’.

The Bank of England was established in 1694 to act as the government’s banker and to enable money to be available when the King wished to go to war. Before that he had to beg, borrow and steal from the landed gentry. Perhaps there are some comparisons today as the government has created a massive public debt which has been increased by £1trillion in the last two years.

The introduction of a CBDC in the UK could create fear about who is in control and who decides where money goes to and for what purposes. It may become like quantitative easing where money is produced from thin air. That phoney money stays in the economy for governments to spend and individuals such as those with assets to reap the benefits. We are told that the BoE is independent from government interference but the reality is that the BoE and successive governments are joined at the hip politically. 

If we didn’t know before, since the pandemic it is crystal clear that government can operate without the consent of parliament, whether by necessity or out of a sense of political conviction, and little can be done to provide checks and balances. There are some very powerful individuals and organisations that now have undue influence over government decisions, and those labelled as globalists and philanthropists are the ones to watch.

We should be very wary of any CBDC introduction until and unless parliament has had a say and the BoE and the Treasury produce some very convincing reports to ensure we are not being led by the nose into a situation that further undermines the democratic role of parliament and those of us who elect them.

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Geoffrey Bastin
Geoffrey Bastin
Geoffrey Bastin lives in retirement in East Sussex with his long-suffering wife, having been unable to change the world although still hoping to influence it in some small way before it's too late.

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