Novus ordo seclorum* and the end of the hegemony of banks

Photo vía Les Belles Maisons

The world is moving towards a new financial culture in which we have yet to see what will be the role of the banks we know today. The last global financial crisis wiped out the basic principle of any balanced banking system: trust. Like a tsunami it swept everything away with its muds using the motto too big to failas a lifeboat. The hurricane however has its consequences, and now that the storm seems to have calmed down we see old, exhausted, discredited banks. Beyond digitalization and fintech, there are several signs that indicate their hegemony has come to an end.

On one hand the progress of new technologies and hyperconnectivity bring the debate of the obsolescence of physical money. In countries like Canada, Holland, Belgium, United Kingdom, Sweden, France or United States more than 50% of transactions do not involve cash. Many advocate for cheaper, more flexible and accessible financial operations available in new platforms.

Time will tell whether it is utopia or reality that the world becomes a cashless society.

It is no easy to eradicate a tradition (hard money) that has been around for more than 2.500 years. Singapore, for example, has failed in its first attempt and the government has backed out understanding that people use different currencies and methods of payment for certain transactions.

Switzerland, on the other hand, takes the financial debate to a new level. In a historic referendum last June 8th, they voted on the Vollgeld Initiative, intended to strip private banks of the power to create money through loans. This unprecedented initiative (witch would radically transform the capitalist system) was rejected by a majority of 75% of the Swiss society, but let’s take it as a warning signal, since it seriously questions the responsibility and the performance of private Banks.

Now, if something has opened the doors of the new financial era is the birth of the Bitcoin and its Blockchain technology. Although the operations are complex, its foundation is simple. To simplify it somehow, we can say that it is an alternative financial community where members Access anonymously to make payments and transactions that are recorded in a shared ledger. Everything supported by a decentralized system that operates outside regulatory authorities and where the structure as a whole is more important than each individual.

What is innovative (more than its disruptive technology) is that the anonymous creator (or creators), known by the pseudonym Satoshi Nakamoto, puts the digital currency at the service of a new deontological code, the Bitcoin Manifesto, promoting an open and independent economy, therefore not dependent on political will.

Fort he first time in centuries a form o payment does not represent the power of a country or a group of countries, a newly independent state or a totalitarian authority. In other words, in the 21st century a new power, technology, claims its throne.

In every era, minting new coins has been one the first acts to proclaim sovereignty and power. Beyond the economic necessity, paper money and coins are official vehicles for demonstrating the identity, values and public image of the issuer. In such a way, power has passed from robust warriors, to royal rulers, religious authorities, politicians and in recent times to large corporations and to one of the main creators of money, making the culture of debt our «daily bread».

This is just the beginning. That is why is obvious that given the implications these new financial communities have for the maintenance of an existing power, many voices rise up against it predicting some sort of «algorithmic» apocalypse and foster fear by announcing an exponential growth of illegal business (like the so-called digital silk routes) or the loss of control of our own personal finances. However this dark side will not be fixed by any technology but by the development of a new financial humanism that reminds us that while we worry about cryptocurrencies, in a large part of the world women, men, boys and girls are still acceptable forms of payment.

* Novus ordo seclorum: translated as «a new order of the ages» is one of the two mottos that apear on the back of the one-dollar bill since 1935 and on the reverse of the Great Seal of the United States.