World Economic Forum creates global digital currency governance consortium
Much like digital currency itself, this consortium will either be a pivotal force or a wasted opportunity.
The World Economic Forum (WEF) is a non-profit organisation whose overall goal is to improve the world. In broad strokes, it was founded on the idea that the private sector should not be dedicated purely to profits, and that change is best effected by the public and private sector working together.
To this end, it unifies central bankers, politicians and leaders of industry around shared interests, such as swanky villas and networking events. The Davos meetings are the WEF's annual events.
Now the WEF has announced the creation of a global consortium for digital currency governance.
"Digital currency, a cross-cutting topic that requires input across sectors, functions, and geographies, is a key area of interest for the Forum," said WEF founder and executive chairman Klaus Schwab. "Building on our long history of public-private cooperation, we hope that hosting this consortium will catalyse the conversations necessary to inform a robust framework of governance for global digital currencies."
By its nature digital currency crosses borders, while alternative currencies like Bitcoin and stablecoins naturally undermine the conventional principles of central bank economic management. As such, a diverse approach to governance which encompasses governments, central banks and the private sector, is key.
With any luck, at least one of those parties will argue in favour of the world's best interests and represent the world's poorest ~50%.
"Creating new economic opportunities and a paradigm shift in how technology is used can benefit all societies. What we need now is multistakeholder cooperation that is anchored in principles of social justice," said AID:tech CEO Joseph Thomson.
"While digital currencies offer wide possibilities, these have to be assessed against the fundamental objectives of economic advancement and shared prosperity," said Patrick Ngugi Njoroge, Governor of the Central Bank of Kenya. "Global governance of the diverse initiatives provides greater assurance of this outcome."
The laying down of governance systems now could well determine how everything in the fourth industrial revolution shakes out. Assuming all these good intentions don't just get bogged down by competing agendas and then compromised out of existence, or grossly co-opted by a single-minded bloc, the creation of this consortium could end up being a historically pivotal moment.
Will central banks retain total control of global money issuance? How will commercial banks fare against a wave of disintermediating financial technology, and how will they try to influence proceedings? Will governments and central banks leave room for alternative currencies like Bitcoin and stablecoins? How big can a stablecoin be before it's officially a threat to global financial stability?
"The release of digital currencies will have far-reaching implications, from domestic financial stability to international trade," said Rania A. Al-Mashat, Minister of International Cooperation, Egypt. "As such, it is imperative that efforts to regulate digital currencies are well-informed, collaborative, and global in nature."
Where will the WEF's stakeholders land on issues of privacy? Will the world's elites be officially miffed when dictators use the power of digital currency to crush dissent, and will the resulting governance framework have anything to say about it? What will the resulting governance frameworks consider to be an acceptable amount of corruption and money laundering?
"We are exploring the potential that properly-regulated digital currencies hold for cheaper and faster cross-border payments, financial inclusion, and rooting out illicit finance," said Tharman Shanmugaratnam, Senior Minister, Singapore and Chairman, Monetary Authority of Singapore. "This dialogue between public and private sector players is now essential, so we find the right roles for each in realizing this potential."
And then there are all the questions of competing national agendas. Will the PBoC bring the digital yuan to the proceedings? Where do multi-national digital currencies like the proposed BRICS-bucks fit into all of this? Will the US (yet again) try to strong-arm other nations into cementing the greenback as the global reserve currency? Is the creation of a single global currency the inevitable culmination of these talks?
"We applaud the efforts by the WEF in actively researching digital currencies, including those that are blockchain-based, as a means to foster innovation but also ensure that central banks can maintain their role as stewards of the economy," said ConsenSys founder Joseph Lubin.
And isn't it wild how Bitcoin, which was originally created to erode central bank power, has resulted in central banks meeting up to collectively decide on how to best harness the power of digital currencies?
"We welcome the dialogue the World Economic Forum is facilitating about digital currencies," said Facebook Libra head David Marcus. "We agree that good regulation is important for the success and safe adoption of digital currency platforms and are looking forward to continue to engage in this constructive conversation."
"Before we came here, we had a few demands for this WEF, and of course those demands have been completely ignored. But we expected nothing less," said Greta Thunberg.
Disclosure: The author holds BNB, BTC at the time of writing.