Amidst the international drama involving Russia’s invasion of Ukraine, Malaysia is mired in a corruption drama of titanic proportions of its own.
Yet more 1MDB scandal-related revelations have rocked Malaysians’ already battered and bruised trust in our politicians, business leaders and public institutions.
This episode, more than any other in recent history, might have exposed these people and the formerly respected organisations they front for what they resemble: a revolving door of classless, conniving characters leading seemingly cancerous, colluding, corrupt cabals of power.
The most interesting part of the whole affair for me was former banker Tim Leissner’s allegation about how Bank Negara Malaysia (BNM) approved an “overnight” foreign exchange transfer of US$1 billion from 1MDB to PetroSaudi International (PSI) after then central bank governor Zeti Akhtar Aziz’s husband Tawfiq Ayman had allegedly been bribed to “make it happen” – an action Leissner described as “unprecedented”.
Tawfiq has since denied he ever took any bribe.
Such allegations give rise to suspicions and questions about the credibility and impartiality of the organisation that dictates our nation’s monetary policy and as a direct relation, the value of our ringgit.
After all, BNM’s actions directly affect how valuable the money in our bank accounts are, so its actions are of extraordinary relevance to every Malaysian.
But as I’ve written here and here, its monetary policies have not always been beneficial to the everyday Malaysian. Its prolific money printing has produced a dreadful inflationary environment which is devaluing the ringgit and damaging our purchasing power in the process.
These are all obviously distressful developments, but what BNM is considering rolling out might be the most terrifying of them all.
There’s a flurry of talk that governments and central banks of the world, including Malaysia’s, may introduce a Central Bank Digital Currency (CBDC).
A CBDC, in BNM’s own words, is “central bank cash (banknotes and coins) made available in electronic form. Yet, ‘digital currency’ is not new as most central bank money is already digital.
Therefore, the key innovation with CBDC is the potential for non-banks (individuals and firms) to hold direct accounts with the central banks or to transact directly with one another using the CBDC as a legal tender. This has been made possible by the technology used in private digital currencies, namely the distributed ledger technology (DLT).”
The table below, from BNM’s paper on CBDCs, provides a succinct overview of how CBDCs differ from e-money and cryptocurrencies:
In simple terms, instead of storing our money in commercial banks such as Maybank, CIMB, RHB and a myriad others, and using e-wallet services such as GrabPay or Touch’nGo to pay for things, a CBDC will be a one-stop shop solution, where we can both store our money and pay for things using BNM’s dedicated app.
In my opinion, this has one benefit: It is a more efficient and less intermediated solution compared to today’s fractured but still properly functioning payment rails.
Yes, proponents of CBDCs will rattle on about its many other benefits but these mostly comprise benefits to the central bank and the government rather than benefits to ordinary citizens. In any case, the table below details what the European Central Bank (ECB) thinks are the benefits of CBDCs:
But under the guise of CBDCs’ seeming barrage of benefits lies a much more sinister reality. This was best encapsulated by a line in an article in The Telegraph, which was reporting on the CBDC plans of the Bank of England: “Digital cash could be programmed to ensure it is only spent on essentials, or goods which an employer or government deems to be sensible.”
What a downright terrifying thought.
With CBDCs, the government would be able to dictate how and what we spend our money on. The money that we have earned through our hard work would not be ours to spend at our discretion if the government arbitrarily deems our purchase as something not sensible.
But what gives the government – or anyone other than us, for that matter – the right to dictate what is sensible for us and what isn’t?
In such a future, everything we do with our money – if we can even call it that anymore – will be under the scrutiny, surveillance and control of the government.
In fact, Sandra Ro, chief executive of the Global Blockchain Business Council likened CBDCs to vouchers that the US government uses to pay benefits.
Sir Jon Cunliffe, a deputy governor at the Bank of England, had this to say about CBDCs: “You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets. There is a whole range of things that money could do, programmable money, which we cannot do with the current technology.”
I can’t help but think of this statement as a phrasal Freudian slip – something that reveals what he thinks the relationship between the state and its people should resemble: that of a parent and their children.
But we are not children, and the state – which has a chequered history of deceit and corruption – should certainly not act as our parent.
In such a world, if a CCTV catches you breaking the speed limit or if you hold an opinion that the government of the day deems a threat, you could be slammed with a fine and funds may be immediately pulled out of your CBDC account.
In a worst-case scenario, if they find your offence adequately egregious, they could easily freeze your CBDC account, disabling access to your finances and turn you into a financial pariah overnight.
This is the perfect tool to quell dissent and opposition. Imagine you’re an opposition member or a conscientious dissenter. If the government deems you or your ilk a threat, they can simply disable your CBDC. Now you have no money to pay for anything; all your life’s hard work turned into nothing.
It has the hallmarks of the ignominious Chinese social credit system – a system where people are turned into modern-day quasi-slaves who aren’t allowed to do or say things that the government deems is inappropriate – a system where you toe the line or are forced to pay a hefty price. This is the grim reality that George Orwell warned us against in his seminal work, “1984”.
Think this is unlikely? Just three weeks ago, Canada – a country until recently thought to be a progressive democracy – froze the bank accounts of its own citizens who donated to the Freedom Convoy movement – a group of protesters, largely consisting of truckers, who opposed the nation’s vaccine mandates.
These donors and protesters were law-abiding Canadian citizens who were merely exercising their right to peaceful dissent and, for that, were demonised and turned into financial pariahs.
It was especially telling to see how easily the banks rolled over and complied with the Canadian government’s request to freeze the bank accounts of their customers.
That really begs the question: If the state and banks can freeze your money if and when they so please, do you really own it? Is the money in your bank account truly your money?
CBDCs will only make this financial deplatforming even easier, hence likely more prevalent. Instead of the government needing to force commercial banks to comply through emergency laws, with a CBDC, they can do so anytime they please. CBDCs also further concentrate and centralise power, and in the process deprive ordinary citizens of their power.
Now let’s consider a hypothetical situation much closer to home. The government isn’t a fan of famous artist Fahmi Reza, to put it mildly. He regularly gets charged for his work, which the government deems inappropriate and offensive.
If CBDCs become a reality and are mandated, instead of having to jump through the legal hoops of charging him and dragging him to court, the government might just be able to freeze his funds with the flick of a switch. This would invariably financially incapacitate him, crippling his ability to sustain a living.
Now imagine this happening to other peaceful dissenters, opposition members and maybe even ordinary citizens who express opinions that are incongruous with that of the government.
Is this the future you want?
A population that is deathly afraid of the government reaching directly into their life savings at the slightest hint of arbitrarily and conveniently-defined transgressions is a population living a slave-like existence.
This frightening prospect is a reality that is rapidly descending upon us. China’s CBDC, called the digital yuan, is already being piloted. Many other countries, including Malaysia, the US, the UK and South Korea are intently studying it.
Sure, BNM hasn’t indicated that it will implement CBDCs anytime soon, but I fear that once other nations start implementing it, our central bank may feel the need to do so as well.
I’m not imputing any bad intention on the part of BNM. I’m just warning that as with all technologies, CBDCs are a tool – a tool that, in this instance, would facilitate further centralisation of power to the state.
This, certainly is not the future any of us would want.
We should nip the idea of a CBDC in the bud before it is introduced and somewhere along the way someone in power decides to turn us into financial slaves of the state and kills our civil liberties.
The writer can be contacted at [email protected].
The views expressed are those of the writer and do not necessarily reflect those of FMT.