Central Bank Digital Currencies’ (CBDCs) Near Universal Roll-Out Signals International Power Grab

By Stavroula Pabst / Original to ScheerPost

Nigeria faced a months-long cash crunch earlier this year when a scarcity of paper notes led to days-long ATM lines, decimated access to basic goods and services, and protests and riots in major cities by a population demanding that cash access be restored. In addition to record levels of inflation — Nigeria recorded a 17-year inflation high of almost 22 percent in March — and a boosted mistrust of the banking system among Nigerians, the lack of physical monies, causing a widespread inability to pay for necessities, even led to deaths at hospitals. 

The culprit behind the cash crisis? Nigeria’s botched Central Bank Digital Currency (CBDC) roll-out. 

Launched in late 2021, Nigeria’s CBDC, the eNaira, rolled out amidst a sudden global push toward researching and implementing CBDCs, which are a digital version of a country’s fiat currency, facilitated by its central bank. Indeed, the Atlantic Council sums up the world’s rapid CBDC uptake on its CBDC Tracker, highlighting that while only 35 countries were considering a CBDC in 2020, 130 countries — representing over 98 percent of the world’s GDP — are doing so now, with 64 countries in an “advanced phase of exploration (development, pilot, or launch).” According to the Tracker, the United States is now in the “development” phase of CBDC exploration.

Despite governments’ acute interest in CBDCs, the extreme eNaira push took place after a prolonged lack of both interest and trust among Nigerians in the digital currency. Notwithstanding the government’s efforts to sweeten the deal, including access restriction removals allowing eNaira use without a bank account, and discounts for those using the CBDC to pay for taxi rides, only .5 percent of Nigerians had used the CBDC by October 2022. Further, the eNaira platform had only recorded 1.4 million transactions as of early May 2023 in a country of over 210 million people.

Rather than heed citizens’ cash preferences, the country’s digital limitations and its largely informal economy, the Nigerian government doubled down on its eNaira roll-out in late 2022, attempting to simultaneously switch out old Naira notes for new ones while removing excess monies from circulation, also capping cash withdrawal limits to promote CBDC uptake. The liquidity mop-up soon made day-to-day financial transactions all but impossible as government policies stunted access to physical money.

For now, Nigeria’s cash crisis has subsided thanks to the government’s softening up on its efforts, distributing paper banknotes and, after extending the deadline for old Naira notes’ end of circulation to the end of 2023, confirming the notes would remain legal tender ad infinitum

But, a critical question remains: why such efforts to force a digital currency on a largely unwilling population? To answer this question, I investigate herein today’s elite-led drive toward CBDCs across the globe, exploring how they’ve been tested or implemented in Nigeria and elsewhere.

While advocates say CBDCs allow for cheap transactions, are secure, convenient, stable and can even promote “financial inclusion,” we shall see that such arguments cannot explain the political and corporate elite’s’ near-universal drive toward CBDCs. Paving the way for a financial system where governments are granted significant oversight over centralized financial transaction records and histories, and therefore, substantial information about one’s daily life, CBDCs’ true significance instead lies within their unprecedented potential for mass surveillance and monitoring and, if made programmable and interoperable between countries, even economic and social control internationally. 

In other words, CBDCs facilitate a financial infrastructure perfect for an elite power-grab.

Tracking the CBDC Craze: What and Why

From the preparation-stage digital euro to the operational Digital Bahamian Sand Dollar, research, pilot projects and launches of Central Bank Digital Currencies (CBDCs) are taking the world by storm as governments look to move past cash. Countries like Canada, the United Kingdom and the United States have asked for the public’s feedback on possible CBDCs while other countries research, develop, and pilot various projects, including Russia’s digital ruble and Brazil’s digital real pilot involving VISA, Microsoft and other corporate giants. 

In ongoing pilots internationally, CBDCs have been tested in a variety of use-cases, especially for crossborder payments, wholesale use (i.e. larger transactions, especially between banks and other financial institutions), and retail, day-to-day use. Different CBDC designs are also up for consideration: for example, “account-based” CBDCs, where accounts are linked to personal identities, could be used to buy consumer goods (i.e. groceries) with a digital wallet or app on one’s mobile phone. “Token-based” CBDCs, which could operate more like cash and perhaps even offline, have also been considered. 

The trend toward centralized digital currencies is clear; arguments for adopting CBDCs are less so. While CBDC advocates often bring up CBDCs’ convenience, cheaper transaction costs and ability to enhance financial transparency, such arguments do little to frame CBDCs as a catch-all solution to the financial system’s problems, which could instead be addressed through other legislative means. Economists concur: remaining “skeptical that a Federal Reserve CBDC would solve any major problem confronting the U.S. payment system,” Christopher J. Waller, member of the Board of Governors of the Federal Reserve System, opined that CBDCs were a “solution in search of a problem.” 

Other advocates push CBDCs’stability, supposing that government-facilitated digital currencies are an alternative for Bitcoin and cryptocurrency enthusiasts tired of volatility. Yet, as Thomas Fazi writes for UnHerd, people invest in Bitcoin and cryptocurrencies “precisely because they are decentralized systems beyond the control of governments, and because they hope their value will rise over time,” and thus are unlikely to want involvement with highly centralized systems like CBDCs.

In other cases, Central Banks, like Canada’s, argue that CBDCs may help their respective currencies maintain dominance as cryptocurrencies and other cash alternatives flood the market. But this talking point is debated: while the Treasury and Bank of England judged a retail CBDC necessary “to anchor the value and robustness of all monies circulating in the [UK],” The Economist disagrees, opining that “it is hard to see why creating [CBDCs] would be the simplest way to prevent monetary fragmentation.”

As they would give governments direct or near-direct access to financial transaction histories, CBDCs’ potential for monitoring and surveillance are clear. And yet, CBDC advocates rarely address privacy concerns or other possible problems: in this respect, Duke University’s FinReg blog highlights a striking gap in the existing literature on CBDCs, elucidating that while scholarship and other relevant writing focuses on CBDCs’ technical design and macroeconomic implications, “[m]issing in these discussions is CBDC’s potential to infringe on citizens’ privacy.”

Despite the glaring literature gap, CBDCs’ potential for abuse is a real and imminent threat to both civilians’ livelihoods and whatever democratic structures and processes still exist internationally. To elucidate CBDCs’ surveillance and control prospects, among other severe ethical issues CBDCs bring to the table, we return to Nigeria’s recent cash debacle — and the forces behind it.

Nigeria’s Recent Cash Crunch as a CBDC Crash Course 

The eNaira’s stated objective is to enable “households and businesses to make fast, efficient, and reliable payments, while benefiting from a resilient, innovative, inclusive, and competitive payment system.” Such goals seem humble enough; a second look at Nigeria’s botched eNaira effort, however, ultimately showcases the myriad questionable elite-backed efforts and goals baked into the CBDC’s development and release. Indeed, under the guise of “modernity” and “financial inclusion,” the eNaira roll-out crystallizes and signals precedents for a CBDC infrastructure prime for data collection and connectivity with other crossborder governance initiatives and projects, like digital ID — all while striving toward the increasingly visible elite goal of a cashless society. 

For example, the eNaira’s website says that, instead of replacing cash, the eNaira “will complement cash as a less costly, more efficient, generally accepted, safe, and trusted means of payment.” But the website’s words conflict with consistent political and financial elite language that instead suggests CBDCs could help facilitate or otherwise direct society toward a cashless economy. On the anniversary of the eNaira’s launch, for example, Nigeria Central Bank Governor Godwin Emefiele said that the country’s aim was toward a “100 per cent cashless economy.” The statement was well in line with the likes of the cashless society-minded World Economic Forum (WEF), which, in 2017, published an article elucidating that the “gradual obsolescence of paper currency” was a “characteristic of a well-designed CBDC.”

Such cashless prospects, of course, suggest that, if CBDCs are successfully implemented, civilians who prefer cash’s anonymity or are otherwise worried about CBDCs’ privacy issues may eventually be unable to opt out of such a system, even if they can do so at first.

Another concern is digital currencies’ possible, if not likely, entwinement with controversial digital ID schemes, which have gained ground internationally despite fears that digital ID could facilitate additional barriers to society and employment, pose surveillance and privacy risks, or could otherwise be weaponized against minority groups. Despite CBDC hiccups, Nigeria has had significant success advancing its own digital ID infrastructure, with about 100 million Nigerians registering for a digital ID by late May 2023.

Critically, Nigeria has clear intentions to connect digital ID with its CBDC, which, by centralizing much of one’s personal information and financial records in one place, could make the monitoring and surveillance of civilians an even simpler prospect for governments. In fact, a Bank for International Settlements report stated that Nigeria’s eNaira would not be anonymous under any circumstances, even for “lower-tier [digital] wallets” holding less money. The same report suggested such systems were also brought about to help facilitate “financial inclusion,” elucidating that “[u]niversal access to eNaira is a key goal of the [Central Bank of Nigeria] CBN, and new forms of digital identification are being issued to the unbanked to help with access.”

But, Nigeria’s “financial inclusion” argument for CBDCs is not unique; rather, groups like the World Economic Forum and the International Monetary Fund twist the term to depict CBDCs as a benign endeavor beneficial to marginalized groups’ financial needs. The phrases “inclusion” and “unbanking the unbanked,” are pushed despite the populations’ mixed and negative attitudes toward government-facilitated digital currencies.

“The fact that [the eNaira] was government-led caused trust in it to be significantly low,” a Lagos-based researcher told Rest of World. “People don’t trust the government to hand over their financial transaction information directly to them.” And other CBDC announcements and proposals have received substantial backlash: when the U.S. Federal Reserve solicited public comments on a prospective CBDC, for example, commenters flooded the request with concerns about financial stability, privacy and freedom.

Ultimately, Nigeria’s disastrous CBDC roll-out, and the many elite-backed tools and goals baked into its launch, is a prime manifestation of the political class’ drive for technocratic oblivion. And the eNaira’s chaotic launch, eventually spurring a cash shortage that devastated CBDC-resistant Nigerians, only demonstrates the wicked lengths the powerful will go to accomplish their goals.

CBDCs’ Grave Dangers to Civil Liberties

Despite the eNaira’s rocky roll-out, the efforts behind the Nigerian CBDC, such as strides toward going cashless and CBDC compatibility with digital ID schemes, reveal intentions to develop and expand the CBDC in ways that perpetuate, rather than address, common concerns about CBDCs’ potential for abuse. And yet, Nigeria’s problematic roll-out is not unique; rather, CBDCs pose significant ethical problems everywhere.

Of CBDCs’ potential hazards, programmability, roughly defined as the ability to build-in or establish terms and limits on a digital currency’s use, is perhaps the most dangerous because it offers unlimited possibilities for CBDC facilitators (i.e., governments and their third-party collaborators) to limit or block access to money as desired, or to otherwise manipulate civilians’ finances to nudge or force certain behaviors. 
Discussing programmability, International Monetary Fund (IMF) Deputy Managing Director Bo Li alluded to CBDCs’ use as a policy-implementing instrument — with significant power over individuals’ daily lives — at an October 2022 high-level roundtable on CBDC:

CBDC can allow government agencies and private sector players to program — to create smart contracts — to allow targeted policy functions. For example, welfare payment; for example, consumption coupons; for example, food stamps…By programming a CBDC, money can be precisely targeted for what people can own and what [people can do.]

Facilitating finance- and policy-related decisions with the push of a few buttons, further, programmability could make bypassing traditional policymaking processes a simple endeavor for governments. Considering QR-code based COVID-19 vaccination passports functionally banned people from society in recent years, it’s not hard to imagine governments similarly weaponizing CBDC programmability to financially “punish” civilians for unwanted behaviors in the future — likely without needing to consult the public or other governing bodies about the decision.

Critically, nations’ own CBDC projects likely will not stand alone; rather, prospects for crossborder and international CBDC projects are being explored. The Atlantic Council’s CBDC tracker lists the myriad of ongoing crossborder CBDC projects, such as Project Sela, Project Icebreaker and Project Jura, which have been testing crossborder payment methods for a variety of countries’ CBDCs, thereby further expanding CBDCs’ prospective reach.

Meanwhile, efforts toward “interoperability,” which Bank for International Settlements (BIS) defines as “[t]he technical or legal compatibility that enables a system or mechanism to be used in conjunction with other systems or mechanisms,” which “allows participants in different systems to conduct, clear and settle payments or financial transactions across systems,” could even facilitate or pave the way toward a more centralized, or perhaps even singular, CBDC system worldwide. 

In fact, IMF Managing Director Kristalina Georgieva confirmed in June 2023 that the IMF is  “working on the concept of a global CBDC platform” for cross-border transactions, explaining at a conference attended by representatives of African central banks that “CBDCs should not be fragmented national propositions … To have more efficient and fairer transactions we need systems that connect countries: we need interoperability.” 

Within the context of CBDCs’ almost unilateral consideration or adoption among the worlds’ powers, such possibilities for CBDC interoperability, and, therefore, the further centralization of payment methods and the relevant data they would use, collect, or track internationally, should frighten anyone concerned about CBDCs’ prospects for surveillance and control.

Importantly, the global CBDC push occurs within the context of growing elite financial abuses, such as the de-banking of political dissidents, like the 2022 Canadian Trucker Convoy protestors and European journalists including Alina Lipp, and a multitude of dissident publications’ and journalists’ PayPal suspensions and GoFundMe donation freezes, already occurring without a CBDC. Such abuses should only signal that those pushing CBDCs cannot be given the benefit of the doubt. 

Perhaps most damning, the political and corporate elites have even admitted to CBDCs’s propensity for political control. Fooling European Central Bank President Christine Lagarde into a prank phone call, an impersonator of Ukrainian President Volodymyr Zelensky posited that “the problem [with CBDCs] is [people] don’t want to be controlled,” prompting an oblivious Lagarde to admit that through CBDCs, “there will be control, you’re right. You’re completely right.” 

Lagarde’s subsequent qualification during the phone call that CBDCs could only provide a “limited amount of control” can only be described as ludicrous, considering the bevy of issues CBDCs pose to society at large.

Towards a Global Financial Control System?

Efforts to depict CBDCs as inclusive, convenient, secure and even inevitable ultimately do little to hide their potential for surveillance and even perhaps social control wherever implemented. In this respect, CBDCs’ near universal consideration signals significant threats to civil liberties and (what’s left of) democratic policymaking processes and structures internationally. 

At the time of writing, the rapid pace of CBDC exploration signals that a kind of “race” among nation-states to develop and roll-out digital currencies has begun, thus making it all the more likely CBDCs will become mainstream without critical public debate about their possible ethical ramifications. After all, failing to establish a digital currency when rival or hostile nations already have their own could jeopardize a country’s financial future in ways currently difficult to predict.

At the same time, the international drive toward CBDCs must force a fundamental reconsideration of today’s geopolitical fault lines. Many posit the growing BRICS bloc of countries (Brazil, Russia, India, China, and South Africa, and as of August, also Saudi Arabia, Iran, Ethiopia, Egypt and the United Arab Emirates) can directly challenge the West in a bid for multipolarity, where non-western countries will have a greater ability to act on their own accord on the global stage. The BRICS’ own embrace of CBDCs, however, instead suggests that the international political and corporate elite agree about a vital issue concerning the globe’s financial, political and social trajectory. Even as a U.S.-Russia proxy war rages in Ukraine and Israel besieges and ethnically cleanses Gaza, both situations where genuine geopolitical hostilities may expand into larger regional wars or even a world war, the apparent CBDC consensus signals universal strides toward a technocratic dystopia are also a key elite priority: in such efforts, CBDCs are the lynchpin.

Fortunately, there is good news: many people do not want CBDCs, or otherwise remain keen on keeping physical cash, perhaps blocking CBDCs’ capture of the financial system. Some U.S. states, including North Carolina and Florida, are considering or have preemptively banned or restricted CBDCs’ use. Prioritizing cash’s longevity, meanwhile, Swiss civilians gathered enough signatures earlier this year to force a future referendum which, if successful, will enshrine the availability of cash in the Swiss Government’s constitution. 

Meanwhile, the world’s first operational CBDC, the Digital Bahamian Sand Dollar, appears to be quite unpopular among Bahamians, with few merchants accepting the CBDC as payment years after its 2020 launch. According to the IMF, the Sand Dollar only represented .1 percent of [The Bahamas’] currency in circulation as of 2022, with the Bahamas’ infrastructure providing “limited avenues” for the Sand Dollar’s use.

The powerful can work around the clock to create and implement CBDCs; they will only be successful if the population accepts and uses them.

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