“There hasn't been a great deal of conversation about the consequences for users or inclusion, but I think that's a really important consideration given where we exist now post-2008.”

He furthered that 2008 moulded the world that we live in today, and one of its consequences is that there are myriad people across the world under the age of 40, who are finding it increasingly difficult to be socially mobile, access yield, access housing and accommodation. Also, wages have stagnated but costs have not, inflation has impacted people far more than others, and so the conversation about the future of money must be embedded in this reality.

Therefore, Egan stated, this dialogue around any potential consequences about fundamental or significant change the nature of money should feel very real.

“Money at this point in time has become more notional than it has ever been before, and has become somewhat unmoored - it is so much beyond payments at this point.”

Following on this subject, Glyptis asked Bin Ru Tan, CEO (SouthEast Asia) of Oneconnect Financial Technology, to consider whether - given this focus on feasibility - the role of the bank has changed as we progress down the path of leveraging digital capabilities.

Simply from a technology standpoint, Tan stated that the “digital banks of tomorrow” are considering the cryptocurrency space and the need to provide some level of custodian capability, and foreign exchange, to be prepared to manage digital currencies in the future. These capabilities are not typical in the tech stacks of commercial banks today.

“The model of traditional and conventional banking today, need to embrace how crypto exchanges will work, and how they’re going to interact with the current banking systems.”

Egan continued that this evolution presents an existential threat to retail deposit takers - specifically when the sophisticated central bank digital currency model is introduced.
While he noted that there remains plenty of merit in the custodial network, and for trade capacity, commercial banking and global transaction banking, banks are still built on the foundation of providing “very rudimentary” retail deposits. With CBDCs, central banks will themselves become the controller of the “money multiplier.”

“Traditionally, the algorithms that existed within our financial network were the banks themselves. It was a mechanical process, which has now been automated, redesigned, as an algorithm that exists within the central bank rather than the money multiplier mechanism out there in the economy. That’s a big concern for deposit takers, but it’s my understanding that there are not many banks out there considering this proposition.”

On top of this, Egan stated that CBDC present a potentially dystopian future for the users.

“As soon as you begin looking at the programming of money, you can also program usage and restrictions. It’s a curious thing that CBDCs often get mentioned in the same sentence or at least the same paragraph as cryptocurrencies as philosophically, as they are at polar opposite ends of the spectrum. One is about being immutable and uncensored - a currency that can’t be taken from you by a government entity, and the other one is exactly that.”

Extending the dystopian analogy, Egan added that if you imagine a centrally controlled cryptocurrency in a totalitarian or racist society “for instance, Nazi Germany or apartheid South Africa,” exclusion, isolation and ostracization could be used as a fundamental mechanism of segregation in society.

“That is really, really concerning,” he commented, “and I haven’t really seen any credible solutions to some of those issues that are likely to emerge.”

“Technology is neither good, bad nor neutral. It remains within the gift of the creator and users to determine that - and that’s a question that we have to answer now as technology is advancing more quickly than the morality, the ethics and the principles which should underpin it are.”

Picking up on the subject, Bradley Leimer, co-founder, UnConventional Ventures, acknowledged that while significant concern remains around algorithms controlling users’ lives and the inherent bias of the creators who create the technology we use, he argued that in some ways, money is already programmed.

“Money is programmed, assets are already tokenised, and the value exchange between what we earn and what we spend is very much a systemic part of our society and community values. The challenge we’re going to have is what happens when parameters are on the dystopian side? What happens when we define value where it isn’t consistent across the community? What happens when wages are put into a black list or a white list?”

The “utopian” way of looking at CBDC sees greater access, while the “dystopian” view sees CBDC as a means of control.

Leimer’s interest lies more closely in the potential stablecoins, and the tokenisation of private money. He argued that when we talk about privatising things, everything tends to become decentralised, eventually becomes re-centralised, and is then monetised - regardless of whether it's a technology platform, a government backed digital coin, a token, or another form of embedded finance.

“I don’t think that tokenised money, CBDCs and stablecoins are going to be the story of inclusion because the incentives are all wrong. I think they’re more about control and extraction and continuation of a business model that is very much lost on serving the needs of the entire community.”