As the British press focus minds on the ‘Brexit Breakthrough‘ between the UK and the EU, IMF head Christine Lagarde has issued a rallying call to central banks to advance plans for issuing digital currency.
- I believe we should consider the possibility to issue digital currency. The advantage is clear. Your payment would be immediate, safe, cheap, and potentially semi-anonymous.
- A new wind is blowing, that of digitalisation. We float through a world of information, where data is the ‘new gold’, despite growing concerns over privacy and cyber-security. A world in which millennials are reinventing how our economy works, phone in hand. And this is key; money itself is changing.
The line of ‘data is the new gold‘ is very similar to one used by her counterpart at the Bank of England, Mark Carney, who some months ago stated that ‘data is the new oil‘. The synchronicity, I would suggest, is not a coincidence.
This intervention by Lagarde on the subject of digital money is not new. As covered through this blog, Bank for International Settlements General Manager Agustin Carstens has in recent times spoken publicly about money and payment systems in the digital age, and what role they play for central banks. At the highest levels of economic institutions, there is a clear and concerted drive to digitise all assets and gradually manoeuvre countries into a position where cash is made obsolete.
The chief argument being formulated to introduce digital currency is to present crypto currency such as Bitcoin as a stalking horse, and to claim that only money issued and backed by central banks can be guaranteed as safe to use. The suggestion, however, that economic elites are not on board with blockchain and distributed ledger technology is false. Goldman Sachs and JP Morgan to name a couple both have active programmes to re-calibrate their systems around blockchain.
It is not blockchain technology that the likes of the BIS and the IMF have a problem with. What they are seeking to do is ensure that all future payment systems and digital currencies run through their auspices. The goal, therefore, is to eliminate physical money and change entirely to what Mark Carney described as ‘intangible capital‘.
Assisting this endeavour are the British public, who are now making payments via card and contactless technology at a record rate. According to the British Retail Consortium, cash payments in 2017 amounted to only 22% of purchases. Card payments are now the preferred option, based largely around the convenience factor.
Troubling also is how cash machines in the UK are closing at record numbers. In September, Link announced that over 250 free to use machines are disappearing every month.
As discussed in a three part blog post two months ago (Fourth Industrial Revolution: Mission Creep towards a New World Order), a cashless society is one strand of what is dubbed the Fourth Industrial Revolution. 4IR is a subject that throughout 2018 has crept into central banks communications.
To emphasis, Victoria Cleland, who is Executive Director of Banking, Payments and Financial Resilience at the Bank of England, gave a speech recently on the future of payment systems. Right now, RTGS (Real Time Gross Settlement) is the system through which the majority of payments in the UK pass through. The BOE wants to ‘renew‘ this system, but as Cleland said herself, a ‘fundamental renewal‘ of his magnitude would be undertaken ‘through choice rather than necessity‘. In other words, the system works as it is, but the bank wants to assume more control over it.
She went on to say that ‘now seems an opportune time to promote the transformation of the payments landscape‘. Why now? One reason, as Cleland goes into, is the link between the reform of RTGS and distributed ledger technology. The reforms at present do not link the two technologies, but nevertheless the BOE ‘are working to deliver a service that has the capability to interact with DLT systems should demand emerge.’
Distributed ledger is a fundamental component of digital money. And Cleland confirmed that on testing the ‘renewed‘ RTGS, the results showed that DLT is capable of connecting with RTGS and settling payments.
It is a gradual process (as all globalist intiatives are), but what this is demonstrating is that payment systems are in the midst of being deliberately reformed to accommodate the shift from physical to digital assets. The drive ties in with other key tenets of the Fourth Industrial Revolution.
If central banks achieve their ambition of restricting all usage of money through a digital only construct, people will be entirely beholden to that system and will not be able to make any form of purchases without it. Banknotes and coins provide individuals with the right of anonymity. With data being ‘the new oil/gold‘, the implication is that globalists want the world’s citizenry locked into a cashless system – one that eventually will see the abolition of physical money.
I would venture at this point that the adjacent narratives to digital money – namely the rise of ‘populism‘, ‘nationalism‘ and ‘protectionism‘ throughout the world – are connected. Three examples are the dollar’s world reserve status being placed in jeopardy through the vehicle of the ‘Trump Trade War‘ with China, the UK’s imminent departure from the European Union, and the new ‘populist‘ regime now governing Italy. All these combined, along with the ‘normalition‘ of monetary policy being administered by the Federal Reserve, Bank of England and the ECB in the background, have the potential to coalesce into a currency led crisis (one that nationalism et al will be used as the scapegoat for rather than central banks). If realised, this would then bring the International Monetary Fund directly into play with their special drawing rights basket of currencies, and so begin the reformulation of money around the globe.