New Zealand’s central bank has opened a consultation on Central Bank Digital Currencies (CBDCs), and a group of academics is warning that its links to a digital ID pose serious civil liberties risks.
The Reserve Bank of New Zealand (RBNZ) is exploring the potential implementation of CBDCs, which are digital forms of a country’s fiat currency issued by the central bank. Unlike traditional digital money stored in bank accounts, CBDCs are directly under central bank control and can be programmed for specific uses.
The RBNZ consultation on CBDCs, which ends on July 26, 2024, aims to gather public feedback, but the Physicians and Scientists for Global Responsibility New Zealand (PSGRNZ) argues that the conversation is skewed to favor the bank’s objectives without sufficient independent analysis.
As detailed in an op-ed by sociologist J.R. Bruning, PSGRNZ is concerned that the implementation of CBDCs is not merely about digital cash but involves critical interoperability with digital IDs. Digital IDs are essential for accessing CBDCs, making it possible for the government to track and control financial transactions more precisely. The integration of CBDCs and digital IDs allows for programmable money, in which conditions can be set on how the money is used, creating a potential tool for unprecedented government surveillance and control. This could have severe implications for civil liberties, as it may lead to the erosion of privacy and individual autonomy, the group argues.
PSGRNZ identifies four major democratic risks associated with the combined use of CBDCs and digital IDs. First, the enhanced government oversight over private activities could lead to widespread surveillance. Second, the programmable nature of CBDCs, enabled by smart contracts, could allow for remote and conditional execution of financial transactions, which might be exploited for policy enforcement. Third, the introduction of CBDCs could undermine parliamentary oversight and democratic accountability, as the power to create and manage digital currencies would be concentrated within the central bank. Lastly, the alignment of the RBNZ with global institutions like the BIS and IMF might result in New Zealand becoming more accountable to these bodies rather than its own parliament.
Moreover, the group draws attention to the potential for regulatory capture, where the interests of powerful global financial institutions and the Fintech industry could dominate the policy-making process, sidelining the needs and concerns of ordinary citizens.
PSGRNZ argues that the lack of local independent commentary and scrutiny on this issue is concerning. It recommends a six-year moratorium on CBDC trials to allow time for thorough assessment and understanding of the potential impacts. The group believes that such a pause would enable society to evaluate the political, financial, and constitutional implications of these technologies comprehensively.
PSGRNZ also calls for a broader involvement of public law experts and the general public in these discussions to ensure that the risks are adequately addressed and mitigated.
Source: Daily Telegraph New Zealand
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June 24, 2024 – by Cass Kennedy
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