Corbishley wrote the book “Scanned: Why Vaccine Passports and Digital IDs Will Mean the End of Privacy and Personal Freedom.”
Digital currencies are issued by central banks directly to consumers, individuals, and businesses, cutting out the middlemen, although some big intermediaries could still be allowed to exist, Corbishley said.
Central banks cooperate on digital currency with governments to the point that it is very hard to determine the extent to which central banks control governments or governments control central banks, he said. It is difficult to see “where one ends and the other begins.”
Corbishley thinks that if banks have the ability to determine what people and businesses can and cannot spend their money on, “it will be unprecedented levels of control over us” and it would mean restricting financial transactions of individuals and small- or medium-sized businesses to certain spaces and certain places.
“This is what is called programmable money,” he added and compared it to a “kind of financial lockdown.”
With cash, it is not possible to track how the money is spent, as one person can give cash to another person as a gift without any middleman, and nobody knows about this handout, Corbishley said. In a world with central bank digital currencies—a world without cash—“that will no longer be a possibility. Every payment we make will be tracked and traced, and possibly there will be fees placed on it,” he noted.
Push for Central Bank Digital Currencies
Some countries have experimented with central bank digital currencies (CBDCs), but no country has gone further than China, which has been planning its digital currency since 2014, Corbishley said. However, China has not officially launched a CBDC beyond the pilot test phase, but its pilot includes about two dozen cities representing a significant portion of its population, he added.
In the United States, the Federal Reserve has already launched a 12-week pilot program with nine major financial institutions, including Citigroup Inc., Mastercard Inc., and Wells Fargo & Co., to experiment with a CBDC and a proof-of-concept digital money platform called the Regulated Liability Network.
Loss of Anonymity
Launching the digital euro would involve “some sacrifice in privacy and anonymity,” Corbishley pointed out.“When we surveyed Europeans, the first concern that they had, in addition to the support to the digital euro, was privacy,“ Lagarde said at the conference. ”Privacy is first and foremost on their mind when we develop the digital euro.”
The ECB president also noted that “there would not be complete anonymity as there is with bank notes, for instance, but there would be a limited level of disclosure, and certainly not at the central bank level.”
Federal Reserve Chairman Jerome Powell said at the same conference that if a CBDC is to be pursued in the United States, it would require identity verification so “it would not be an anonymous bearer instrument.”
War on Cash
“At least over the last decade, we’ve seen a gradually escalating war on cash,” Corbishley said.
“There are very powerful interests who would love to have a world without cash,” Corbishley said, and on top of that list are some Big Tech companies and many of the credit card and payment processing companies.
Banks have an interest in reducing the use of cash because it’s expensive for them, he said.
Central banks, on the one hand, want to preserve cash because it’s important in the face of the threat posed by cryptocurrencies, stablecoins, and all other digital forms of money, which are private forms of money, Corbishley explained.
Nigeria Pushes for Digital Money
“So the uptake has been around about 0.1 percent,” Corbishley said, “despite the fact that the central bank has done everything and the government have done everything they can to encourage people to use it. They have banned banks from allowing transactions or enabling transactions involving cryptocurrencies in a country where cryptocurrencies are gaining more and more interest.”
After a year, Nigerian policy to replace cash with a digital currency has not seemed to work, Corbishley asserted, so the Nigerian central bank resorted to demonetization through banknote redesign.
The redesign involved “withdrawing high-value notes from the economy in order to reintroduce the notes in a new format,” Corbishley explained. “It can also be used to reduce the ability of people to use cash.”
The Central Bank of Nigeria (CBN) announced in October the redesign of the nation’s three highest banknote denominations of 1,000 naira, 500 naira, and 200 naira (equal to about $2.23, $1.11, and 45 cents, respectively) to replace them with new currency notes.
“We believe that the redesign of the currency will help deepen our drive to entrench a cashless economy as it will be complemented by increased minting of our eNaira. This will further rein in the currency outside the banking system into the banking system,” Emefiele said.
This is an 87 percent reduction in what Nigerians normally could withdraw from their bank accounts, Corbishley said. “It’s a massive change in people’s lives.”
Testing Ground
Watching the development of a CBDC in Nigeria is important “because it is the first major economy on the planet to have launched a central bank digital currency,” Corbishley asserted.The African Union depends on finance from external entities beyond Africa, so with that level of dependence, “it’s so much easier to get things done,” Corbishley explained.
However, there have been warnings from many different organizations and NGOs about how Africa is being used and how the digital programs are being used by authoritarian governments, he noted.
“If a central bank digital currency gets launched in the United States, they will have to jump over so many different legal barriers. That is not going to be easy. ... I think everybody needs to be watching what’s happening in Nigeria.”