Monetary colonialism, a concept lesser-known due to its divergence from traditional definitions of "colonialism," finds a modern link through the emergence of Central Bank Digital Currencies (CBDCs).
In contrast to the historical image of territorial expansion (or, "boots on the ground"), this discreet yet influential phenomenon operates within the financial realm, where dominant nations assert unequal economic control over weaker counterparts.
So before we teleport to the digital realm of CBDCs, let's go to Africa and some recent events.
The coup in Niger
The coup was led by a group of military officers who were unhappy with the government's economic policies, including its reliance on the CFA franc, a currency that is pegged to the euro and is controlled by the French treasury. The coup leaders have pledged to renegotiate Niger's membership in the CFA franc zone, which they believe is a form of neocolonialism that keeps Niger's economy subservient to France.
A coup d'état (French for 'stroke of state'), or simply a coup, is an overt attempt by the military or other government elites to unseat the incumbent leader.
The coup took place in the context of growing resentment in Niger and other African countries against the economic dominance of France and other Western countries. This resentment has been fueled by high levels of poverty and unemployment, as well as by the perception that African countries are not benefiting from their natural resources. The coup in Niger could be seen as a sign of this growing anti-colonial sentiment.
This could have implications for the future of monetary colonialism in Africa. If the coup leaders are successful in renegotiating Niger's membership in the CFA franc zone, it could set a precedent for other African countries to do the same.
This could lead to a decline in the influence of France and other Western countries in Africa's monetary affairs.
Interestingly enough, just some months back before the Niger coup, the Human Rights Foundation (HRF) produced this stunning video, which is precisely about the CFA franc.
The current chairman of the Human Rights Foundation (HRF) is Garry Kasparov, the former world chess champion (and political activist) and I have always rooted against my idol, Anatoly Karpov. The HRF was founded in 2005 by Thor Halvorssen Mendoza, a Venezuelan film producer and human rights advocate.
The HRF is a non-profit organization that promotes and protects human rights globally, with an emphasis on closed societies. The foundation's work includes providing legal aid to human rights defenders, supporting independent media, and organizing advocacy campaigns.
The HRF is not affiliated with the United Nations Human Rights Council (UNHRC). The HRF has also been critical of the UNHRC, arguing that it is not effective in addressing human rights violations in some countries.
Monetary colonialism goes digital
With CBDCs becoming increasingly significant on the global stage, this form of digital monetary dominance embodies the subtlety that often masks its presence, underscoring the concealed but substantial influence reshaping the trajectory of nations.
Central bank digital currencies (CBDCs) are digital versions of fiat currencies, issued by central banks. They are still in the early stages of development, but many countries are exploring the possibility of launching CBDCs.
The Bank for International Settlements (BIS) is an international organization that promotes cooperation among central banks. The BIS has been actively researching CBDCs and has published a number of papers on the topic. In a 2021 paper, the BIS identified a number of potential benefits of CBDCs, including:
- Enhanced financial stability: CBDCs could help to reduce financial instability by providing a more reliable and stable form of digital money.
- Improved monetary policy transmission: CBDCs could help central banks to transmit monetary policy more effectively.
- Reduced costs of cross-border payments: CBDCs could help to reduce the costs of cross-border payments.
However, the BIS also acknowledged the potential risks of CBDCs, including:
- Cybersecurity risks: CBDCs could be vulnerable to cyberattacks, which could lead to financial losses or identity theft.
- Privacy risks: CBDCs could pose a threat to privacy, as central banks would have access to detailed information about people's financial transactions.
- Centralization of power: CBDCs could give central banks more control over the financial system.
The Human Rights Council is a United Nations body that is responsible for promoting and protecting human rights. In a 2022 report, the Human Rights Council expressed concern about the potential risks of CBDCs to human rights, particularly the right to privacy and the right to freedom of expression.
The Human Rights Council called on governments to take steps to protect human rights in the design and implementation of CBDCs.
In light of the position of the BIS and the Human Rights Council, the following are some of the key considerations for the design and implementation of CBDCs from a human rights perspective:
- Privacy: CBDCs should be designed to protect the privacy of users. This means that central banks should not have access to detailed information about people's financial transactions without a warrant.
- Transparency: CBDCs should be transparent and accountable. This means that users should be able to see how their money is being used.
- Financial inclusion: CBDCs should be designed to promote financial inclusion. This means that they should be accessible to everyone, regardless of their income or location.
- Non-discrimination: CBDCs should not be used to discriminate against any group of people. This means that they should be accessible to everyone, regardless of their race, gender, religion, or sexual orientation.
- Human rights impact assessment: A human rights impact assessment should be conducted before CBDCs are rolled out. This will help to identify and mitigate the potential human rights risks of CBDCs.
The design and implementation of CBDCs is a complex issue with important implications for human rights. It is important to carefully consider these implications before CBDCs are rolled out.