Fiscal Sovereignty
Understanding money as a transaction medium in the wake of a French Press
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In describing the seismic shifts, I have made the case for how the role of Middle Power states is coming under the spotlight. This is happening as the world moves away from a single monopole order, making room for more frequent skirmishes that have their weight on the negotiations table.
From wireless communications to App Wars, the two star-spangled banners, the striped and the red, have been expanding confrontation frontiers. This is an invitation to consider the key role technology now plays in defining and upkeeping a state.
I have argued for utilizing decentralized technology to redesign the Internet as a more intuitive socioeconomic system. When calling for burning a nation’s cash, I have made it clear that digital currencies are set to transform our understanding of economics, and nation-states.
As a start, they enable a more direct coupling between money and transactions, such that the economy is a marginally stable system, developing at the pace of its constituents to solidify equitable growth. Moreover, digital currencies would help governments exert their influence beyond their borders in the long run. It is, then, not surprising that China is further expanding its beta digital Yuan, and the Vieux Continent is eying a digital Euro, as Dijkhuizen, reports. The article serves as a thought experiment a precursor for the discussion of digital sovereignties.
I have previously argued that considering inventories at a national level is one way to back a currency by more than sentiments on a Forex platform. Such a scheme allows for better decentralized governance as well. Consider how “United” States have been bidding against each other for PPE while health stocks continued to inflate the current bubble. Adopting a unified currency should signal a consent for a shared economy and shared future. This is why, with Britain never adopting the Euro, Brexit has long been inevitable.
The symbolism of others adopting your currency has long been recognized. For example, coupons, which have a long tradition in business marketing, are a form of an entity minting its currency backed by its goods and services. While the symbolism is meager at such a zoom level, at a national level using currency is a form of support and allegiance, if not residence. The hegemony of the United States Dollar in global transactions is an indicator of how the world views the US’s economic model, system stability, and global power.
The subject of how the US weaponized its currency beyond the symbolism deserves further inspection. For now, let us consider the push for digital currencies. We take the example of China and the EU above because of their skin-in-game of the global economy, which has the sheer size for driving global trends. The digital Euro should be understood not only within the EU’s border, but also in the light of its global strategy.
China is one step ahead as its FinTech services, such as its payment treasure 支付宝 (Alipay), already enjoy wide adoption beyond its borders. A digital Yuan then fills the backend for existing higher-level layers. On the opposite hand, the European financial sector has the disadvantage of slow, highly-regulated incumbent, leading Asia Times to proclaim that European FinTech must follows Asia’s lead.
Digital currencies enjoy the advantage of smoother transactions cross- and beyond borders. This makes current states wary for the control they exert over their own jurisdictions. Moreover, digital currencies are able to be pegged not only against goods, but also services and processes. A process exists when it is running, and a service exists concretely only after it has been offered. Likewise, digital currencies could be minted (or destroyed?) on demand to match the rhythm and maintain a stable economy.
Traditional currencies could only be pegged to existing goods, whether in a centralized manner such as national gold reserves, or the decentralized manner suggested earlier. This also leads them to be more vulnerable to political whims, which could or could not be to a nation’s benefit.
During the 2018 Turkish Lira (TRY) crisis, shops across Lebanon have set up signs that they accept payments in TRY and offer discounts for those who pay with it. Lebanese Muslims have also stood in solidarity with their Turkish brothers, as they rushed to exchange their USDs for TRYs, to do what they can to prop up their nearby neighbor’s currency.
With the Lebanese Lira (LBP) and Turkish Lira (TRY) in unprecedented territories, exports from one nation to another have been staging a V-shaped recovery. This comes at a time when numerous Lebanese professionals who have been immigrating, in an exodus, following the 4th of August explosion, have chosen Istanbul as their destination.
France, on the other hand, has had high stakes in its former mandated territory, Lebanon. It wanted to not only curb the Turkish expansion in the region, but also secure the gas reserves in the East Med for EU nation states and their string-attached allies. However, it has recently had to retreat into its homeland.
While it touts its “Mission Laique” — secular mission — France’s true bequest is sectarianism. This is no more evident than in its multicultural former colony, Lebanon, a country which first edition of civil law after independence has copied the French’s. Despite its president being welcomed with a warm embrace, its initiative, the French Initiative, has been effectively locked up in the drawer of Lebanese politicians.
Its colonial relics are losing their lure as the fragility of French civilization is unmasked. In Quebec, a French Canadian province, a man in ‘Medieval’ clothing has murdered two and injured others in a ‘sword’ attack. As much as the death and wounds of the victims are real, the attack is a metaphor for the French crisis.
France suffers from the blind spot it prides itself for having. While the French Revolution has set the separation of the state and church in stone, religious discrimination has carried over. France’s problem with Islam has a history that goes back at least 200 years. In reality, the fact that the House of Bourbon, a branch of the royal House of France, still rules over the Iberian peninsula today tells a different story.
French Muslims are not the only group suffering under the nation’s institutionalized discrimination. After the recent stabbing homicide at a church in Nice, the French President expressed how the Republic stands with its Catholic community, and announced that the armed forces protecting public places, including churches, would be more than doubled. Yesterday, an Orthodox priest in Lyon has been shot and fatally wounded as he headed out of the church after service.
Apart from discrimination against Muslims and Orthodox Christians amongst others, one religious group receives special treatment. Over 90% of private schools are Catholic, and 20% of which receive government funding, all while the president calls for stronger ties between the state and the Catholic Church, as Reuters reports, and his country is further pushed into atheism or irreligiosity.
It has been over two years since the incident, during which timeframe included the American Jesuit Review claiming France is a cradle for a Catholic Renaissance, five years after France’s The Local penned an article reminding its readers that “the Catholic Church is too powerful in France.” Indeed, the Germany’s DW got it right amplifying the voices who have been warning that secularism is fueling divisions and extremism.
After struggling to handle the Yellow Vests Movement, the president, who could not shake off his ‘elitist’ karyotype, seems to be reviving Medieval primalities amidst an international backlash, from Muslim-majority countries as near as Turkey or as far as Bangladesh, with a $100 billion dollars at stake. France’s secular values come under further scrutiny as hypocritical limits on freedom of speech are highlighted in its current crisis.
The boycott ensuing the French crisis is exemplary of the power of consumers. Turkey’s record weapon exports amidst its current currency plunge pinpoints the powers of producers. In Turkey’s 2018 crisis, it was shops that took initiative to accept Turkish Lira in support of Turkey. In France’s 2020 crisis, it was supermarkets that took the initiative to cede the sales of French products.
Both cases highlight the role of neither the individual, nor the government, but an intermediary. While it stems from individual freedom, and materializes at highest at the level of a government in a state, it is at the intermediate level of transactions that political will manifests itself.
Thus, when designing a distributed ledger, underlying a digital currency amongst other things, it is important to allow it to be shaped by the interactions arising in the group. This is where the importance of open-source code, forks and merger is throned.
