Pish Posh
Now the incompetent fools in Wellington have teamed up with the incompetent fools at the Reserve Bank to attempt to wreck the New Zealand Dollar by digitising it.
Having wrecked our housing market, escalated inequality and spectacularly fallen from grace by bungling the Covid response, the Labour Government have now turned their attention to rushing through legislation to digitise the New Zealand Dollar. A move that would give them terrifying control over our cash.
The window to make a submission closes with breathtaking speed on December 6.
What Is a Digital Currency and Why Is the Government Smashing Legislation Through?
Without going into the incomprehensible technical details of what blockchain technology is, in a practical application, cryptocurrency is a way to transfer value that is digital and has no intermediaries or third parties such as banks. It enables money to be sent instantly anywhere in the world without the need for a bank or a credit card to process the transaction.
Unlike cryptocurrencies that operate in a decentralised manner, a digital currency is a digital representation of a country’s fiat currency. Being state-issued, digital currencies are developed in a way that preserves the state’s control over them.
The terrifying downside to this is the potential lack of privacy that users of state digital currencies will experience, as the digital currency would be much more controlled than cash and offer real-time insight into people’s personal finances.
Anwar Sheluchin of McMaster University summed up the Canadian Government digital currency outlook:
“The Bank of Canada’s exploration has suggested that establishing a digital currency would provide them with the ability to collect more information on Canadian consumers than ever before. These personal details and data could then be shared with third parties, such as law enforcement, which currently require a warrant to investigate the spending habits of an individual.
“The notion of collecting more information on Canadians through a proposed digital currency raises serious privacy concerns. While cash continues to be the only way to keep your transactions anonymous, the use of cryptocurrency leaves a detailed trail.
“By inserting themselves into the mix, the Bank of Canada aims to assert a new level of state surveillance in the digital economy.
“A national digital currency that collects information on consumers has serious privacy implications, and one of the possible outcomes would be to replace physical money entirely. Institutional monitoring through digital currency spending habits raises concerns around the surveillance of minors, undocumented citizens and our right to privacy.”
In an everyday sense, how could this potentially affect you and me? As digital currencies are programmable, you can code it to do different things based on different conditions. For example, in the case of a business that accepts payments electronically, IRD could set up a system that automatically deducts 15c of every dollar you receive.
Now maybe if Bill English were the guy in charge I would be comfortable giving him control of my business and my assets. But this is during the reign of Grant Robertson. I’d trust him to win a belching competition but nothing more.
If this wasn’t already alarming enough, a state digital currency would need to be operationally resilient to outages and cyber security risks.
To borrow again from Canadian research:
“Government-owned digital currencies would likely reduce transparency due to their centralized governance model. Private blockchains attempt to take the advantages of blockchain technology without giving up all of the control. This centralized approach increases the risk of a single point of failure as all the data is stored in a single system.
“Storing immense amounts of data in a centralized location has not always been successful, often leading to data breaches and leaks. Furthermore, there would be easier access to data since hackers would only have to compromise a smaller number of nodes, compared to the amount of nodes in a public decentralized network.”
Considering the cyber attack that crippled Waikato Hospital earlier this year, despite security agencies warning the government of the vulnerability, I would not be trusting my savings to their management.
So we have the control grab issues, the cyber security issues, the general incompetence that knows no bounds issues, but what really upsets me is the threat to kill our beloved cash culture.
Cash jobs currently make up 4.6% of transactions in a year. Removing cash from our economy would make life that little bit less exciting. No more negotiating with your kids to mow the lawn and paying them in the hand and allowing them to save up with the good old piggy bank for whatever kids buy these days. No more five dollars from Granny in the mail for your birthday. No more paying in cash then pretending it was cheap when your partner asks how much it was.
The Reserve Bank even concedes that cash is here to stay if we have any choice in the matter:
“There have long been predictions of the demise of cash in society. Yet, the consistent growth of notes in circulation at 4.6 per cent per year (in terms of note value; 2.5 per cent per annum in terms of number of notes) has undone many such predictions of a fall in demand. Currency issued has grown by over 6 per cent in the past year. Notwithstanding perceptions of the ‘end of cash’, the demand for cash has continued to grow, pretty much in line with the growth in the nominal economy. In New Zealand, notes in circulation rose from 1.5 per cent of GDP in 1990 to 2 per cent in 2001 and have remained about that level since.”
Jacinda and her incompetent Labour numpties have broken the country in so many ways already. This is surely the limit, New Zealand? Don’t let Jacinda and Robbo into your bank accounts.
The Reserve Bank says “We want your views on how we propose to explore whether a CBDC is right for Aotearoa” Please please give them your views.
