Episode 9: Digital Currency with Yaya Fanusie

Imagine living in a country where everyone relies on a digital currency minted by the government. They say that it prevents a thriving black market, fraud, tax evasion and the funding of criminal acts like terrorism among other things. Sounds utopian, right?

Well, there are some limits. You can only spend so much at any store not owned or financed by the government. Also, your money is accepted at fewer and fewer locations the farther you get from urban centers. Oh, and it isn’t like your money is being tracked, that is unless someone in the government or law enforcement think you might be involved in something criminal… according to the government or law enforcement...

I guess technically, the government could see everywhere you spend your money, what you buy, and who you interact with. I mean, you don’t need to worry unless you are doing something the government doesn’t like, because then they can just turn your wallet off. But who would do that?

This isn’t a dystopian fantasy. This is a very real possibility as governments introduce Centralized Bank Digital Currency (CBDC). A state-sponsored currency is already a reality in some parts of the world, including China, Brazil, Ecuador, and the EU. But as we learn from our guest, Yaya Fanusie, not all CBDCs are created equal. 

We are dancing at the edge of history as governments decide in real time what parameters to put on their currency. Unsurprisingly, authoritarian governments, like China, have paper-thin protections in place preventing state-sanctioned financial abuse. Issues of privacy and autonomy are murky when the government can see every financial system in which the currency interacts and can turn off your funds at the flip of a switch.

The EU is using more caution to protect the individual rights of its citizens. Establishing tough parameters that only show data in the aggregate, the EU is attempting to emphasize the benefits of a CBDC, while minimizing the potential risks. How safe can they make the currency and transactions has yet to be seen.  

What this all boils down to, though, is that the value the government gets from centralizing its currency in digital form, isn’t necessarily money. As we’ve frequently seen in the digital age, the real advantage, the real commodity of value to the government, is data.

Understanding how and where your citizens are spending their money is the ultimate panopticon. Just the knowledge alone, can give you insight into their political leanings, armament, and organizations, not to mention their locations, purchase behaviors, knowledge, attitudes, and demographics.

As Fanusie clearly lays out in his scholarship and outstanding (no seriously, 5/5 stars) podcast, the decisions we make, the decisions our legislatures make, will have serious implications across nations and the world. While it may seem dry, this is heady stuff and a topic requiring a well-informed citizenry. We could all benefit with a bit of googling to educate ourselves as quickly as possible for this new financial frontier.