A central bank digital currency would snuff out freedom

A recent article in the Telegraph, jointly written by Lord Bridges of Headley and Lord Forsyth of Drumlean, current and past chairmen respectively of the House of Lords Economic Affairs Committee, entitled “A digital pound must never be introduced by stealth”, explained why they were pressing the Government to guarantee, in legislation, that “Britcoin” could not be introduced without primary legislation and proper parliamentary scrutiny.  

Their article reinforced the findings of the Economic Affairs Committee that there was “no convincing case” for a British digital currency. The main points made were that a British CBDC (central bank digital currency) would not be a currency at all, just central bank digital money; that if, say, 20 per cent of UK commercial bank deposits went into digital pounds, banks would have less capital to lend, with consequent investment problems for businesses; that personal privacy would be compromised by surveillance of transactions, while cybersecurity risks would be aggravated; and that the cost of such an initiative is unknown.

The Lords’ Economic Affairs Committee, in its negative report on the prospects for a CBDC, described it as “a solution in search of a problem”. Most people, once acquainted with the details of such an initiative, would conclude it was superfluous. But the governing elites are obsessed with technological innovation, especially when it offers a prospect of extending their power over the citizen. As Lords Bridges and Forsyth noted in their article, “No meeting of bank governors is complete without the acronym ‘CBDCs’ on the agenda.”

It is bad news that the financial elites who went overboard for subprime mortgages, to give us the joys of 2008, and who continued compulsively printing money while everyone in the real world was becoming increasingly exercised about rising inflation, have found a new modish innovation to champion that has at least as much power to devastate global financial systems.

The Lords’ Committee recognised a few potential, though far from certain, benefits stemming from a CBDC. “Britcoin” users would have a direct relationship with the Bank of England, as in the days of the old white five-pound notes “Promise to pay the bearer”, with high street banks no longer in an intermediary role. Holding cash electronically would be a more complete insurance against bank failure than the £85,000 compensation ceiling set by the Financial Services Compensation Scheme, of little reassurance to large depositors.

Any further favourable considerations basically boiled down to minor improvements in convenience for customers – not normally a high priority in contemporary banking. The Lords were right to point out that such small conveniences as the ability to make cheaper and easier payments abroad were greatly outweighed by the evident disadvantages and dangers of a CBDC.

One of the dangers that had not previously been adequately discussed is the damaging effect on business and investment, through large numbers of people transferring money out of their bank accounts into digital wallets. Not only would banks be starved of capital to lend – the transaction at the very core of the banking system – but regulators’ stress tests for banks would become meaningless, with institutions unable to predict their own circumstances with any degree of confidence.

Any large-scale movement from banks into digital wallets, perhaps provoked by some social media rumour, with customers no longer having to form a Northern Rock-style queue down the street, instead reaching impulsively for their smartphones to take flight to the security of the Bank of England, would create instability. Any large movement into digital wallets, even for innocuous reasons, would amount to a mini-run on the banks involved.

What, in turn, would be the effects on the Bank of England of a turbulent ebb and flow in and out of its digital currency? Or, in contrast, what if so many depositors elected to use Britcoin mainly, or even exclusively, that the commercial banks were largely deserted? We are looking into a crystal ball so unpredictable, in a context so significant for financial security and living standards, that the only rational conclusion is: here be dragons.

Apart from the increasingly apparent hazards of AI, also relevant to the financial sector, there has been a growing tendency, under the influence of a technological revolution advancing exponentially, to put all our eggs in one basket. In security terms, we have been reduced to a state of constant nervous vigilance lest a Russian submarine, by destroying a few cables on the seabed, might plunge us back into the Stone Age by eliminating all our communications systems.

In the “flash crash” of 2010, a small-time trader working from his parents’ home in east London was blamed for triggering a trillion-dollar stock market crash. It is not polite to say so, but the underlying reality is that a rogue algorithm could theoretically cause a domino effect that would wipe out the accumulated wealth of the global financial system. Reliance exclusively on electronics is inviting disaster. To add to that accident-waiting-to-happen, the further hazards of CBDCs would be sheer hubris.

Despite all that, there is a strong lobby for CBDCs and its motivation is not mainly financial. There is no keener advocate of CBDCs than Klaus Schwab, “chairperson” of the World Economic Forum, as part of his “Great Reset”. The advantages of CBDCs to control freaks include: holdings can be frozen or seized; holdings can be limited; fines can be taken automatically; purchases can be controlled, limits on spending set and expiry dates applied.

Big Brother would control your money, would know every transaction you carried out and, if he disapproved, interdict it. If you attempted to buy a book, subscribe to a journal or attend a conference that conflicted with woke ideology, the transaction could be prohibited and you would thereby attract further surveillance. Even buying doughnuts could be prevented under health-fascist intervention. Any organisation of a conservative character would find itself financially crippled.

That is not speculative: even without a central bank digital currency we are already experiencing authoritarian restrictions. Reform UK had its account terminated by Metro Bank. Laurence Fox’s Reclaim Party was refused an account by many banks. Last year the accounts of Toby Young, his Free Speech Union and online publication the “Daily Sceptic” were shut down by PayPal for supposedly breaching its policies against “hate speech”: for PayPal, free speech is hate speech. This month, the popular Triggernometry podcast run by Konstantin Kisin and Francis Foster was told by fintech company Tide that its bank account was to be shut down.

Most ominous of all was Justin Trudeau’s seizure of the bank accounts of protesting truckers in Canada last year, a very obvious trailer for the main feature, once woke governments gain the additional power conferred by a CBDC.

That is just a slim salami slice of the war being waged against free speech by the banks, now completely captured by the woke ideology. Marxism has been reconfigured: in place of a discredited economic programme of nationalisation of the means of production, distribution and exchange, the target now, as it was for Gramsci and Lukacs, is the culture. In place of proletarians, an effete bourgeoisie has been conscripted as useful idiots to serve the revolution.

The litmus test of illimitable control, such as Marxists seek, is to coerce educated people into asserting to propositions that are axiomatically untrue, e.g. that a man can turn into a woman. Once that has been achieved, the culture has been conquered. While it might seem perverse for banks, the temples and engine rooms of capitalism, to promote a Marxist cause such as woke ideology, they are happy to do so in exchange for enhanced power and control over other people’s money.

Such an arrangement, however, like Marxism itself, defies human nature. It can only end in tears. Meanwhile, the architects of the dystopian future promised by CBDCs must be identified, denounced and discredited. They are preparing a massive hard-sell of CBDCs, based on modernisation and convenience, seasoned with faux-ethical arguments. The Tony Blair Institute for Global Change, whose participation ought, of itself, to raise a red flag, claims: “A well-designed CBDC is uniquely positioned to address barriers to inclusion…”

In fact, it is uniquely positioned to snuff out any voices dissenting from woke ideology. Rishi Sunak is a strong advocate of CBDCs, as this clip shows, so it is fortunate his days in office are numbered. Meanwhile, the Bank of England is making a parade of reviewing its polymer banknotes, which it has discovered are environmentally damaging. Uh-huh?

Our rulers rely on presenting the unacceptable as a convenience, mining the laziness and inertia of much of the population. Convenience has been used to promote innovations ranging from major issues such as abortion to minor novelties such as vanishing postal deliveries.

Lords Bridges and Forsyth emphasised in their article the high importance of ensuring that any putative introduction of “Britcoin”, as Sunak called it, should be subject to the necessity for primary legislation and meticulous scrutiny in Parliament. That is right; but when we recall what Parliament has previously inflicted on Britain, that may not be sufficient to save us from a dystopian future. The only hope of avoiding an imposition already in place in its natural home, Red China, is for the public to signal in advance its intransigent opposition to so anti-libertarian a measure.

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