UK’s PM Rishi Sunak desperate for G7 countries to launch their CBDCs
UK’s PM Rishi Sunak desperate for G7 countries to launch their CBDCs
by Dan Fournier, published Friday, Nov. 18, 14:53 EST on fournier.substack.com
Rishi Sunak on October 15, 2021, then Chancellor of the Exchequer in the U.K, promoting CBDCs (video screenshot)
A video featuring British Prime Minister Rishi Sunak has been gaining a lot of attention on social media in which he vigorously promotes the issuance and adoption of Central Bank Digital Currencies, or CBDCs, by G7 countries.
The video appears to date back to late last year when Sunak was Chancellor of the Exchequer (head of the U.K. Treasury), a position he held until being sworn in as the new Prime Minister of the United Kingdom late last October.
For those unfamiliar with the technology, CBDCs are digital currencies that countries propose to replace their current cash, coin, and digital entry systems (such as the money in your bank account). People and companies would hold the digital currency in their digital wallets, make payments for the purchase of goods & services, make transfers, and so on.
But unlike Bitcoin, CBDCs would reside on a centralized blockchain rather than a decentralized one. This means the central bank would have full control over its issuance and management.
CBDCs & the G7
Under the UK’s presidency, the G7 announced that it was launching a set of public policy principles for retail CBDCs alongside G7 Finance Ministers and Central Bank Governors.
Sunak, the youngest PM in modern U.K. history, is broadly seen as crypto-friendly which could be beneficial to the Bitcoin community. But some contend that his close ties to banking elites and the World Economic Forum obscures the true intentions behind the launch of a retail CBDC in the U.K. and in other G7 countries such as Canada.
Sunak explained that unlike most of the digital money people use daily today, the CBDC would be issued directly by a central bank like the Bank of England in the U.K., or The Bank of Canada here. That is quite a bold statement, for it implies that central banks, of which most are privately-held corporations, would essentially have complete control over the currency with the potential to bypass governments’ fiscal policies.
For instance, they could directly tax or deposit funds in users’ accounts.
Under such a scheme, commercial banks would, in effect, become mostly unnecessary and potentially obsolete.
More concerns and potential dangers of CBDCs
Augustin Carstens from the Bank for International Settlements (BIS) publicly stated in 2021 that central banks would hold absolute control with regards to their use.
At an IMF conference called Central Bank Digital Currencies for Financial Inclusion: Risks and Rewards held last month, Bo Li, Deputy Managing Director at the International Monetary Fund (IMF), elaborated on many of the features being considered for their development.
Some highlights from Bo Li’s talk [emphasis added]:
At the 19:53 mark “Finally, the third way we think CBDC can improve financial inclusion is, is through what we call programmability. That is, CBDC can allow government agencies and private sector players to program, to create smart contracts, to allow targeted policy functions.”
What is perhaps most worrisome of the previous quotation is the fact where Li mention’s that [unelected] private sector players (such as the many partners of the World Economic Forum) could be involved in the programmability of the CBDC.
Li continues:
“...By programming CBDC, those [sic] money can be precisely targeted for what kind of people can own and what kind of use this money can be utilised; for example, for food.”
At around the 36:00 mark, Li then states:
“For any CBDC ecosystem to work, we think we need public-private partnership. That is central bank will issue the application, we have to rely on private sector to innovate, to distribute, to serve the population. So, we think a successful CBDC ecosystem has to be built on PPP (Public-Private Partnership). Now the question comes, how to make this ecosystem attractive to private sector players? That's a challenge. Because if you think about it, how to make this a profitable business for private players? … And one idea we have, and some of our members are experimenting, is data. Because digital payments generates a lot of data and these data can be very valuable. ”
Then, when the moderator asks Li to provide specific examples of how data can be used, Li states the following (at the 39:16 to 41:04 mark):
“Well, I can give you one example in China because I personally experience it. Those transaction data can be utilised by service providers in credit underwriting. In a sense that, you know, those transaction data in terms of how many coffee I drink every day. Where I buy coffee. Do I use Uber every day? And what kind of working hours I have. Those non-traditional data can be very useful for financial service providers to give me a credit score. And based on the credit score, the financial service provider can give me a credit line.”
While Li’s remarks can be viewed positively such as with how users can rapidly obtain credit lines, or micro-loans (like with Webank users in China), many argue that all this collected data could be used to establish a Chinese-style credit score and punish users based on their consumption patterns or online/offline behaviors.
Another concern – and something that has already been tested in China – is that the central bank may put an expiration date on when certain holdings of the digital currency can be spent. This is a feature that is currently being considered by teams currently developing CBDCs as a possible means to stimulate the overall economy, or certain sectors.
Yet another huge concern is that CBDCs may be used to directly tax individuals and businesses based on their carbon footprints for which there is plenty of evidence to suggest that it is currently in the works.
Notes:
This article is also published in The Counter Signal.
