Canadian Government Executive - Volume 27 - Issue 05

GOVERNING DIGITALLY to fight poverty and hunger. As the CBC has reported, participating families receive twenty ‘Hope Bloom Market Coins’ weekly to pur- chase fresh food at reduced prices, and the response has been highly positive. Such grassroots initiatives are accelerating around the world, par- ticularly in developing countries where governments and traditional banks are mired in corruption and/or disfunction. Crypto platforms further enable the transferring of resources across countries in more efficient and affordable manners than the wire transfers of yesteryear. Of course, along with community activists come opportunistic mar- keters and more nefarious, criminal elements seeking to exploit dis- ruption for financial gain. With respect to the former, Kim Kardashian (with her 250 million social media followers) was recently admon- ished by the head of the British Financial Conduct Authority for her promotion of a speculative crypto offering, adding that it may well have been ‘the single biggest audience reach in history’ for a financial promotion. American Treasury Secretary, Janet Yellen has criticized Bitcoin as ‘extremely inefficient’, citing inherent volatility and widen- ing security risks. In light of such volatility, South Korea has sought to clamp down on a widening youth epidemic of crypto-gambling, while China has seen enough – seeking to enforce an outright ban of almost all forms of crypto-activities. The Chinese reaction is telling in this regard as crypto dynamics fundamentally challenge national sovereignty and state authority. China would instead prefer its own digital currency, as a virtual complement to the national yuan that would remain firmly under state control. And therein lies the dilemma for OECD countries and much of the rest of the world – namely how to balance the empowering and entre- preneurial aspects of crypto-innovations with heightened disruptions and widening systemic risks? For now, at least, Canada seems content with a wait-and-see ap- proach. The Bank of Canada has researched options for a digital cur- rency, exploring various models with Canadian universities as well. A recent report from the Bank of International Settlements (an in- ternational entity owned by predominantly western central banks) declared that cryptocurrencies are a threat to the public good, pre- ferring instead digital variants controlled directly by central banks within each country. Sensing a challenge to the global prominence of the US dollar, the Biden Administration has appointed several, reputable crypto skep- tics to key government posts. Congress has also become increasingly engaged in the topic, seeking to devise a new regulatory regime that, in fairness, at least some elements of the fledging crypto-community welcome as a means of increased stability and legitimacy. As platform companies, notably Facebook, seek their own digital payment schemes, it is entirely possible and evermore likely that within a decade, the world could see an uneasy co-existence of two broad types of financial instruments for payments and exchange: tra- ditional national currencies (in physical and digital formats), and a multiplicity of digital and crypto variants that enjoin local initiatives and global communities in endeavours both legal and otherwise. As with Covid and climate change, countries will struggle to balance and reconcile innovation and stability on the one hand, and national interests and global coordination on the other hand. For a myriad of developmental and national security reasons, Canada’s next Parlia- ment should make an expansion of crypto-literacy – for elected of- ficials, public servants, and the populous at large, an urgent priority. Jeffrey Roy is a professor in the School of Public Administration at Dalhousie University (roy@dal.ca ). September/October 2021 // Canadian Government Executive / 25 And therein lies the dilemma for OECD countries and much of the rest of the world – namely how to balance the empowering and entrepreneurial aspects of crypto-innovations with heightened disruptions and widening systemic risks?