We already have digital money. We want transparency in democracy. We want governments that are accountable to civil society. Lets disrobe the rhetoric of unelected lobbyist banker emperors.
WE ALREADY HAVE DIGITAL CURRENCY
It is being progressed by institutions and actors from broad walks, just not by civil society. This includes institutions that are traditionally viewed as apolitical, such as the World Bank and reserve banks; by pervasively political actors such as the World Economic Forum; by unelected representatives, such as Ursula van der Leyden; and by unelected institutions such as the IMF.
Remember – we already have digital money. The production and release of digital money occurs with every budget. It’s not necessarily hard cash. The spending proposals in the domestic Budget are divided into areas known as ‘Votes’. Treasury helps organise the allocated expenditure, which becomes money generated by the Reserve Bank of New Zealand after the Vote process. Budgets can be in deficit, when more money is printed, and digitally entered, than is taken in income via taxes etc. The world will not go to pieces, if the deficit is recorded as a negative entry.
(Yes this is terribly crude but I am trying to make the greater point that this is undertaken for the most part through digital entries. Foreign exchange and trade is a different story from domestic budgets. )
We have all the resources and technology in our government NOW to ensure financial inclusion, to protect our most vulnerable and to enhance science, education and health for public good. (Our trade balance is different issue).
The reason we don’t want CBDCs is because of their programmability (see 20.00). Ex People’s Bank of China, IMF Deputy Managing Director Bo Li in November 2022 stated:
CBDC can allow government agencies and private sector players to programme to create smart contracts, to allow targeted policy functions. For example, welfare payments, for example, consumption coupons, for example, foodstamps. By programming CBDC those money [sic] can be precisely targeted for what kind of people can own and what kind of use this money can be utilized. For example for food. So this potential programmability can help government agencies to precisely target their support to those people who need support.
CBDCs are an agent of control. Nothing less. They are an extraordinary threat to democracy and human agency, because of these programmability mechanisms.
Like most tech – they are dual purpose. Benign, or … not benign.
The bankers use a rhetoric of financial inclusion to advance this policy agenda – more access to money – but who decides who gets what? Why and how? There are no democratic processes built into these narratives – merely excitement over the prospect of deploying the tech.
The aim, the end result – without democratic consultation, with terribly designed regulatory processes that cannot assure accountability and transparency, with hidden algorythms – can only be described as a coup.
BANKS & DIGITAL CURRENCIES
It’s a bait and switch, whatever you might term it, because our banks already use digital money. CBDCs are a Trojan Horse, a wolf in sheeps clothing – and the rhetoricians use all the public friendly murmurings to secure their social licence.
Arguably the best book to understand how the majority of money is already digitally produced is Macroeconomics, by Mitchell, Randall Wray and Watts. Stephanie Kelton’s book The Deficit Myth is easier (and cheaper). There are others.
Basically, the government already can put digital money in your bank account. They already do, via benefits etc. through a series of processes (after budgetary Vote allocations) where it is then deposited into a commercial bank such as Westpac or ANZ. Then it’s yours.
Current digital money directed to civil society is not programmable. It won’t disappear if you drive to far, protest too much, or eat too much meat.
There’s no need to change. Most money in society is produced digitally.
You really don’t want the government and big business to be one click away from shutting your life down – controling access – with a CBDC directly controlled through a central bank.
Remember, most of the coercion over the last 3 years has been financialised. Rough surveys have found 80% of Kiwis got injected to keep their job – to pay their bills. The Canadian truckers were financially cut off from PayPal. Money talks.
Arguably, the most important issue is that money injected into the economy (and .. extremely hypothetically … into protecting education, health and the environment) should not be so excessive as to drive inflation.
[This is a separate form of inflation than the choice of large duopoly and oligopoly firms to increase their prices … just in case there might be inflation or to ensure their profits are sustained and continue to increase. (That is inflation driven by anticipatory greed – not by consumers). This is also a different issue to house inflation driven by rentier economies where increasing Ponzi equity ensures that landlords can bid housing prices up far beyond the capacity of potential home-owners, and governments fail to put policies in place to protect the average Kiwi who just would like to own their own home.]
[Note, I’m a fan of business, but not offshore-owned massive duopolies and oligopolies that, without antitrust action, use ongoing predatory tactics to erode and prevent meaningful competition.]
ACCESS TO CBDCS ASSOCIATED WITH A GOOD DIGITAL IDENTITY
China’s social credit system demonstrates how quickly digital identity systems can be scaled up to manage citizen behaviour, and ensure compliance with government policy.
Western banks currently work with third party vendors to aggregate bank account transaction behaviour. There is little evidence that third party knowledge sharing is restricted. Large equity management firms have equity stakes in these vendors, and these firms have long-term relationships with banks, global institutions and governments.
There is no line in the sand when democratic government oversteps, when nudges and coercive legislation, balanced by a compliant media, ensure that population autonomy and freedom are excised.
Currently ‘open banking’ is being promoted by David Clark (and WEF partners like EY and Deloitte…). I believe it will be put in law through consumer data right legislation. As I’ve noted, the Fintech industry can’t wait. Financial firms are licking their lips.
Watch Musk closely. His takeover of Twitter was lauded by many, but he has repeatedly indicated deep admiration for WeChat, and indicated he would like Twitter to function similarly. WeChat is operationalised in China as a device of social control. WeChat is one of the eight entrusted Chinese companies who partner the Chinese government regarding their social credit system
‘an instrument of an overarching ideology that simply reflects the interests of the CCP leaders.’
BTW: WeChat’s owner Tencent has a 5% stake in Tesla.
Digital identity frameworks and the actions of service providers are woefully opaque. With little transparency, and mega barriers to accountability, there is extraordinary potential for abuse of political and financial power, and the undermining of autonomy and human rights with digital identity systems. The systems are blackboxed in software, in algorithms, and artificial intelligence. Yet in government representations of how to manage digital identity systems, there is no line of site beyond privacy issues.
It’s important to understand that the collusion of these unelected actors, is resulting in other technological policy pushes that appear designed to reduce the autonomy of citizens through the biological integration of technologies into human bodies.
Yes it is collusion – civil society aren’t partners to these processes. They are excluded, then nec thing – our own institutions place them in policy but this is top down direction.
DIGITAL IDENTITY AND PRIVACY… REALLY?
But cultural values arise from technical and business cultures, driving what is technically prioritised in the digital world. They do not arise from democratic deliberation. But they have potential to shape power and agency. As James Moore cautioned nearly 40 years ago:
‘The chief threat to computer ethics is not the possibility that a residue of disagreements about which policies are best will remain after debates on the issues are completed, but a failure to debate the ethical issues of computing technology at all. If we naively regard the issues of computer ethics as routine or, even worse, as unsolvable, then we are in the greatest danger of being harmed by computer technology.’
Looking back, industry has set the scope of what we critically assess as ethically problematic, and now our public institutions almost exclusively focus on individual privacy as ‘the risk’ for the public (oops.. .consumers’).
The policy landscape for the development of digital identity systems has its roots not in civil society calls for protective frameworks, but in technical treatises to ensure system functionality; and proposals put forth by governments, large banks, management consultant firms and think tanks that emphasise trust, benefit and responsibility.
However, of course, digital identities have been used in commerce for a long time. Our IDs have just been … separate.
We’ve always been told to not put our eggs in one basket.. because … risk.
Credit cards are frequently triangulated with other identification to gain access to services, events and products. What a bother! What a hassle!
These big institutions are pitching convenience…
just like processed food… so easy. So effort-less.
BIG BIZ RIDDLED WITH COIs
These groups form a ‘hidden oligarchy’, groups that use the excuse or the fig-leaf of appeals to democratic licence to carry out their agenda.
In this landscape, ethics are shaped in terms of corporate responsibility, privacy and the individual.
The technology contains personal data. Data points are known as ‘attributes’ include attributes you are born with such as your biometric data; and attributes which are identifying numbers and tags such as your drivers’ licence, phone number and computer IP address; and geolocation history.
Digital identity is not just a method for access to services, events and products. The technology can be leveraged as a dual-purpose technology for surveillance and behaviour control. Digital identity apps have a back end – and governments can swiftly decouple access to services, events, products and voting rights – even education – if citizens are non-compliant.
Risk scales up as citizens depend on a central mechanism which defines them in administratively.
By risk, I directly refer to the ease with which the state can control behaviour at scale.
Many of us are observing a parallel acceleration in the decoupling of public process from transparency and accountability norms, and the associate decoupling from norms of freedom, justice and fairness.
In such circumstances there is scant provision for protection of human rights. The erosion of the right to informed consent demonstrates that technologies can be scaled up, authorised and deployed, and historical, legal and administrative conventions intended for the protection of health, ignored and discarded in a few short months.
THE WORLD BANK & ‘STAKEHOLDER’ LEADERSHIP
In 2017 the ‘Principles on Identification for Sustainable Development’ were developed by the World Bank in partnership with non-government organisations, many of which have murky or no financial transparency concerning funding arrangements. The Bill and Melinda Gates Foundation (BMGF), have extensive conflicts of interest with the biomedical industry. BMGF funds many of the partner organisations. Others are funded by private equity firms. Yet others are broadly financed from smaller, public good institutions.
PRINCIPLES ON IDENTIFICATION FOR SUSTAINABLE DEVELOPMENT: TOWARD THE DIGITAL AGE (2021). WORLD BANK.
While these are
‘a group of organizations committed to supporting the development of identification systems that are inclusive, trusted, accountable, and used to enhance people’s lives and the achievement of the Sustainable Development Goals (SDGs).’
They don’t represent nation-states, and the absence of any discussion on the role of democratic nation-states, remains outside the so-called World Bank Principle framework. Trust is envisaged (goal 3), as primarily involving the protection of privacy and user rights.
See the framing – it’s all about the individual
The World Bank Principles were designed to
‘promote a common understanding of key issues and good practices; improve stakeholder alignment; guide support and funding decisions; facilitate discussions at country, regional, and/or global levels; and work together to support identification systems that advance economic and social development, protect individual and human rights, and leave no one behind.’
They don’t consider the role of publics, indigenous groups, or elected members. While they claim to build on existing norms, they leave the potential for abuse of power outside the framing, outside the framework.
While ‘sustainability’ is in the header, there is no discussion on environmental sustainability. Bit of greenwashing there.
While the World Bank Principles effectively sweep global citizens into digital identity frameworks, the principles that concern governance are weakly worded, presuming that
‘legitimate, comprehensive, and enforceable legal and regulatory frameworks and strong policies that promote trust in the system.’
Frameworks require a balance between regulatory and self-regulatory models that does not stifle competition, innovation, or investment. Appropriate legal and regulatory frameworks are also required for cross-border interoperability or mutual recognition.
The problem is that the tension between corporate rights and the individual, remains unresolved. The tension between globalist institutional power (including that power held by the World Bank and the IMF) and Soverign states remains un discussed.
In opaque digital environments, it becomes almost impossible to protect abuse when self-regulation is inevitably the main form of regulation across governance systems (this includes the absence of external oversight of New Zealand government information sharing activities using ASIAs.)
This is because industry certification, when regulators have neither inquisitorial powers nor financial resources to support enquiry is inevitably a rubber-stamping, tick-the-box process.
The call to not ‘stifle competition’ is laughable. Ownership structures of the dominant players (NGOs and private institutions) often overlap. Takeovers are essential to retaining and aggregating power. There is no anti-trust action occurring to control the power of these financially networked behemoths.
Principle 10 ‘Enforce legal and trust frameworks through independent oversight and adjudication of grievances’ considers that oversight revolves around risk from data breaches and individual complaints about the processing of data; and that disputes will concern personal data.
What is left outside of this, and not discussed, is the potential for citizens to be persistently shepherded to putting all the ID eggs in one basket.
I imagine we’ll inevitably end up with (to promote ‘competition’) a handful of digital identity providers which will include the New Zealand RealMe instrument.
One of the reasons more and more financial regulations are coming in, is to prevent money laundering. As with ‘financial inclusion’ this is a legitimation device which furthers their claims on CBDCs. But it is excessive. Our governments can do this work without handcuffing citizens to a central digital control system.
In 2020 a major digital identity white paper was produced by the Financial Action Task Force (FATF)
‘an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction.’
The 2020 white paper, indicates that prevention of money laundering and hence customer due diligence (CDD) – ensuring that the beneficial owner is accurately identified (known as documentary CDD)– was a primary motivator leading the development of digital ID assurance frameworks and technical standards. As the document outlined, by 2020, digital identity systems were well underway, in Italy, Belgium, Estonia and Sweden.
Robust anti-money laundering (AML) frameworks are an important check on cross-border money flows from illegal activities. These frameworks reduce potential for identity theft and improve the trustworthiness that institutions can trust that the individual they are dealing with is not an imposter.
Of course, those who launder money, are a small fraction of the population, and in order to develop these frameworks, the entire population becomes absorbed. This is when the benefits rhetorically emphasise a broader public benefit.
FTAF demonstrates how banks led the charge towards digital identity, and how their benefits circulated around CDD to improve the
‘reliability, security, privacy, convenience and efficiency of identifying individuals in the provision of financial services, to the benefit of customers, regulated entities, and the integrity of the financial sector.’
Key benefits of digital ID systems are claimed to minimise weaknesses in human control measures and increase financial inclusion. This includes improved customer experience and generate cost savings and enable transaction monitoring. Transaction monitoring enables banks to potential capture geolocation, IP address and the identity of the digital device. Banks can also identify multiple account holders, and networks of individuals involved in related transactions.
For banks, primary risks involve protecting against impersonators and synthetic identities; but also extend to broader issues include connectivity issues, data protection and privacy challenges and the capacity at the state level to establish sound domestic frameworks.
Yes. But we don’t need CBDCS, thank you
STAKEHOLDER POWER UNDERMINES DEMOCRACY
Highly influential lobby groups, such as Digital Identity NZ can be formed just prior to policy work, and as ‘stakeholders’ gain privileged access to policy development and hence regulations development. Meanwhile, public sector groups are excluded.
For dominant industries, securing and maintaining market access to their technology is their key imperative. If they develop close relationships with government officials, or the management consultancy firms that supply Ministries and agencies with intelligence along the way, all the better.
We see little discussion by the government, officials or academia exploring greater potential risks beyond the right to privacy. Clare Sullivan (2018) has argued that a right to identity, a fundamental human right that arises at birth under the Convention on the Rights of the Child (CRC) can be distinguished from a right to privacy. Sullivan maintains that the right to identity can be
‘recognized under the International Covenant on Civil and Political Rights (ICCPR), 27 particularly under Article 1(1), which states that “All peoples have the right of self-determination. By virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development.’
The gaps in New Zealand policy and legislation, where the right to privacy is enshrined in law, but broader protections concerning identity, freedom the role of civil society remain murky.
These gaps encourage ignorance across civil society concerning the power and control over behaviour. There is no clear constitutional framework, and the Bill of Rights Act can address individual grievances but not larger issues that may reverberate across civil society.
Atomising risk in the individual smooths the path for technical forms of instrumentalism that can erode rights more broadly. As Sullivan states:
‘The right to identity in that context takes specific form as the right of an individual to an accurate, functional, unique transaction identity. Most importantly, the right to identity is inherently robust whereas an individual right to privacy can more readily be subjugated to the broader public interest. By contrast, the right to identity is of such a fundamental nature that its interference cannot be justified on public interest grounds.’
Sullivan quotes Charles Reich who has drawn attention to the basic truism that without protecting individual freedom – a protected personal space – there can be no liberty. Hence,
‘the individual sector” according to Reich is the “zone of individual power’ necessary for the healthy development and functioning of the individual” and “absolutely essential to the health and survival of democratic society.” A right to identity is part of that personal sphere, and arguably it now includes the right to digital identity.’
Just how civil society is meant to temper policy environments which direct favour to relationships, pacts and secret, agreements between the government and large global institutions, remains unsaid.
These policy agreements and secret commercial in confidence pacts undermine the potential for the ultimate source of political authority to be secured from democratic assent.
Because democracy is worth it. The preservation of autonomy and human agency, the preservation of health and the right to refuse a medical drug is worth it. Offshore instrumental agencies will rely on the legitimation of their activities through the use of front groups to keep their nose clean. They will network the hell out everything – using their financial and political clout.
The hardest part is ensuring the public interest is preserved.
Please speak up, even when it is uncomfortable.