Finance Corner

by Dave Johnson B.ComC.A

I was watching a very interesting and thought-provoking video over the weekend until it decided to play no more about two-thirds the way through! However, I can probably guess the likely conclusion as it concerned a topic I have been reading extensively about in recent months.

I have previously written about the proposal to ban cash transactions of greater than $10,000 in Australia, ostensibly to target the black market, but with the main purpose to trap people’s money in banks and thereby open the door to depositor bail-ins should a financial institution be deemed “too big to fail”.

The next thing that many governments around the world are presently looking at is to dispense with cash and introduce a government controlled digital currency. You can just imagine some of the rhetoric that will be used to hoodwink the populace. For example, in America how much easier would it have been to pay those $1,200 handouts in response to the COVID-19 crisis? No more need to carry cash around, everyone can now transact for everything digitally…what a great idea! After all, there is already a thing called cryptocurrency, most famously Bitcoin, which is a digital currency and has been in place for several years, so what’s the difference?

The fact is there is a world of difference. Cryptocurrencies such as Bitcoin are decentralised, no one controls the system and therefore your financial dealings are private, and so they should be. However, with a government-controlled digital currency you can cross off the first two letters “de” and suddenly kiss goodbye to the valued principle of privacy.

Imagine, all the details of where you spent your money this morning contained in a massive centralised ledger that the government can review at its whim. Why are you subscribing to that particular newsletter that tends to run contrary to the incumbent government’s policies? Why did your digital wealth increase 5% over the past week…we need to look more closely at what you are doing? That is just the start of what could be the proverbial “slippery slope”.

Of course, it could all be introduced with wonderful sounding justification just like the aforementioned $10,000 cash ban, and therefore many people will embrace it until they realise what has actually been unleashed.

Conspiracy theory? You be the judge. As I always say, forewarned is forearmed.

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Photo by Melissa Walker Horn on Unsplash