In recent decades, following many years of wealth and prosperity - at least in Western countries that are not controlled by dictators or absolute powers - the slow and inexorable corruption of the global financial system has become increasingly evident.
On the one hand, even the strongest currencies have been gradually losing value; the US dollar, for instance, has lost about 33% of its value in the last twenty years, while less stable currencies, such as the Ukrainian gryvnia and the Dominican peso, have recorded losses of up to 70%. This has led to a consistent and significant devaluation of the savings that families have been able to put aside, and as their hard earned money is gradually devalued over time, people who live in less wealthy and affluent areas have been left with nothing.
On the other hand, governments, banks, and corporations have gained more and more control over people’s financial fortunes, largely because of the increasingly widespread use of digitalised and virtualised payments, which leave a trail of personal data that is easily collected by governments and banks. The use of physical money in the past made it harder to track people’s movements, but today this has become much easier and increasingly institutionalised.
These huge data flows and new ways of using money make it even easier for governments to control their citizens’ financial situations. While this may not appear to be a big problem for people living in a democratic country, the same cannot be said for those who live in totalitarian political systems: in these cases, the control of people’s finances, including their data, habits, and ideologies, is a serious issue, and can result in major restrictions on their personal freedom. The authors give the example of a worker in Shanghai, who received a message from a friend in 2019 in which he admitted to smoking marijuana. Soon afterwards, several of her financial services were suspended, including those allowing her to buy tickets for air or train travel, while her credit score had also fallen. As a direct result of a simple text message, a totally innocent person’s basic rights, such as travelling, were erased. This demonstrates how controls by local governments over online communications and their ability to access an individual’s finances, combined with increasing privacy violations, can lead to an abuse of power and human rights infringements. In the most extreme cases, people have their bank accounts and savings frozen, and they are prevented from accessing their financial services, simply for expressing opposition to the local government.
Another financial issue affecting citizens of authoritarian regimes is the freezing of foreign exchange reserves. Countries such as China, Russia, Argentina, and Venezuela restrict or completely prohibit their citizens’ right to exchange local currency for stronger and more stable foreign currencies. This problem is especially serious in economies that are highly susceptible to inflation: such as in Venezuela, in 2018, where there was a 400,000% hyperinflation surge, which destroyed the market and brought citizens to their knees. The authoritarian government’s rules prevented people from exchanging currency, so they were forced to spend their wages on basic necessities as soon as they got paid, before they devalued further.
Inflation has also played a critical role in recent years. Every government essentially has the option of printing more money when the need arises. While this is usually a positive practice that allows peaceful and stable governments to create infrastructure, for example, it can become a problem in the case of unstable political situations, since printing more money results in the devaluation of the common currency. When the economic situation is controlled by corrupt and unscrupulous individuals, the entire economic system is hit by inflation, and the currency loses value, causing a collapse of the market and a decline in the living conditions of citizens.
These factors all show that the current financial system, in addition to the progressive digitisation of currency and payments, is precarious at best. At worst, it could have truly disastrous consequences on individual freedom, and be used as a tool by totalitarian regimes. This is because, in an increasingly connected world, governments have a vested interest in keeping money local: if this changes, and if individual nations are separated from global finance systems, it empowers citizens, and helps the world become a freer and more equal place for everyone.
