Leaders of the Group of 20 have agreed to a plan to finally impose digital currencies and digital IDs on their populations, despite fears that governments will use them to monitor their citizens’ spending and crack down on dissent.

The G20, currently chaired by India, adopted a final declaration on the subject over the weekend in New Delhi.

The meeting, which included the world’s leading economies, announced last week that they had agreed to build the necessary infrastructure to implement digital currencies and IDs.

The group said talks are already underway to create international regulations for cryptocurrencies, but asserted that there was “no talk of banning cryptocurrency” at the summit.

Many critics worry that governments and central banks will eventually regulate cryptocurrencies and then immediately replace them with central bank digital currencies (CBDCs), which lack similar privacy and security.

India’s Finance Minister Nirmala Sitharaman said discussions are underway to build a global regulatory framework for cryptocurrencies as they believe cryptocurrencies cannot be effectively regulated without full international cooperation.

“India’s [G20] presidency has put on the table key issues related to regulation or the understanding that there needs to be a framework to address issues related to crypto assets,” Ms Sitharaman said ahead of the G20 gathering.

The most important items discussed at the summit in New Delhi were “building digital public infrastructure, digital economy, cryptoassets, [Central Bank digital currency]”.

Gita Gopinath, first deputy managing director of the International Monetary Fund, said in a video posted on X that the G20 “helped shape the global perspective on how policymakers should work with crypto assets.”

She also assured Business Today that there was “no talk of banning cryptocurrencies, indicating a global consensus against such measures” in the discussions.

However, some of the proposals call for additional controls on cryptocurrencies, which are decentralized and do not operate under the control of central banks.

Critics say the proposals could allow authorities to impose a system of social credit points and decide how their citizens can spend their money.

The head of the European Commission once again emphasizes the need for digital personal documents

At the summit, the President of the European Commission, Ursula von der Leyen, called for the creation of an international regulatory body for artificial intelligence (AI), digital identification systems such as passports for the coronavirus vaccine, and advocated global cooperation in facing the challenges posed by artificial intelligence.

She called on the United Nations to play a role in regulating artificial intelligence and called the European Union’s digital certificate for COVID-19 a perfect model for a digital public infrastructure (DPI), which would include digital IDs.

“Many of you are familiar with the digital certificate for COVID-19. The EU developed it for itself. The model was so functional and so reliable that 51 countries on four continents adopted it free of charge,” said President von der Leyen.

“Today, it is used by the WHO as a global standard for facilitating mobility in times of health threats.” I want to thank Dr. Tedros once again for his excellent cooperation,” she said, referring to WHO Director-General Tedros Adhanom Ghebreysus.

The European Union is currently trying to introduce a blockchain-based “digital identity” application that would bring together various personal data, including passports, driving licenses and medical histories.

“The future is digital. I delivered two messages to the G20. We should establish a framework for safe, responsible artificial intelligence, with a body similar to the IPCC for climate. Digital public infrastructures are a growth accelerator. They must be trusted, interoperable and open to all,” President von der Leyen said in a social media post. The IPCC is the Intergovernmental Panel on Climate Change.

Lack of public support

The Cato Institute’s May 2023 CBDC National Poll found that only 16 percent of Americans support CBDC adoption. At least 68 percent of respondents said they would oppose CBDC if the government started tracking their purchases.

Most Democrats and Republicans have expressed concern that the government could control what people spend their money on and potentially cut off access to their bank accounts.

Governments are paving the way for CBDCs

IMF Managing Director Kristalina Georgieva praised her Indian counterparts via X (formerly Twitter) for leading in “setting the agenda for cryptocurrencies.”

She said the IMF is also “contributing to proposals for a comprehensive policy framework”.

In a separate press statement, Ms. Georgieva said “there is more work to be done, including in the area of digital money and crypto-assets.”

“To this end, the G20 has tasked relevant institutions to improve the regulation and oversight of crypto-assets – the IMF is contributing proposals for a comprehensive policy framework – to advance the debate on how central bank digital currencies can impact the global economy and financial system,” she added. is. is.

The head of the IMF suggested that instead of recognizing cryptocurrency assets as legal tender, governments should create licensing and registration processes for cryptocurrency issuers and focus on similar treatment of their activities.

Several major economies, including Japan and Russia, will introduce their own pilot CBDCs this year.

Nigeria launched eNaira, the world’s first issued CBDC, but it proved unpopular.

Less than 0.5 percent of citizens said they have used the digital currency, and government attempts to encourage its use have failed.

Meanwhile, the World Bank also praised India’s use of digital public infrastructure to “enhance financial inclusion” and provide public goods and services in a report written for the G20 summit.

As an example, the report cites the national India Stack DPI system, which consists of the Aadhaar digital ID and the interoperable UPI digital payment platform.

The G20 believes that intellectual property rights can serve people not only in the financial sector, but also in the domains of health, education and social protection.

“India Stack exemplifies this approach, combining digital ID, interoperable payments, digital credential ledger and account aggregation.” In just six years it has achieved a remarkable financial inclusion rate of 80 percent – a feat that would have taken nearly five decades without access to DPI,” said Queen Máxima of the Netherlands, who wrote the foreword to the report.

The Queen is the Special Representative of the United Nations Secretary-General for Inclusive Financing for Development (UNSGSA) and was one of the speakers at the annual meeting of the World Bank and the IMF in Washington last year.

“If designed correctly, CBDCs could promise to support a digital financial system that works for everyone. But it’s an important ‘if,'” said Queen Maxima, adding, “If designed and implemented with inclusion in mind, CBDCs could offer many opportunities to expand access to the unbanked and serve the vulnerable and poor.”

However, her statements in support of the plan have come under fire from some in the digitalization debate in the Netherlands for breaking the norm regarding the role of the Dutch monarchy in politics.

“Makima openly advocates programmable money; power in central banks, without parliamentary accountability,” Dutch financial journalist Arno Wellens said via X, calling the queen “an unelected official who is out of politics under [Dutch] constitutional law” and said her statements were “a serious attack on democracy.”