Currency Cold Wars

I’m very happy to be able to confirm that my new book will be published in June 2020, and will be launched at Money20/20 in Amsterdam. The book is provisionally titled The Coming Currency Cold Wars—Cash and Cryptography, Hash Rates and Hegemony.

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Cuis regio, eius pecunia (Whose region, his money)

Advance praise for Currency Cold Wars

No-one has put as much thought into understanding and explaining the exceedingly complex world that all these parallel economic, political and technological developments are creating for us than David Birch.
Michael Casey, author of “The Age of Cryptocurrency”.

Dave is right on the money, outlining the technological and geopolitical trends that shape future digital currencies. A timely analysis which urges us all to design our own smart and anonymous currencies before other nations or bigtech players force us into using theirs. 

Simon Lelieveldt, formerly with Dutch Central Bank and Dutch Bankers Association.

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No one knows more about digital money than Dave Birch, and his insights into where the world of digital currency sovereignty is going, will shock you. Our lives are about to change, radically.
Jeffrey Robinson, expert on international financial crime and author of the worldwide bestseller “The Laundrymen”.

How profound will the digital money revolution be? David Birch has written an insightful and provocative guide to the high stakes involved.

Huw van Steenis, former Senior Advisor to Governor Mark Carney on the Future of Finance

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Here’s the preface to the book in full, in case you want place any advance orders with the good people at the London Publishing Partnership.

The way that money works now is, essentially, a blip. It’s a temporary institutional arrangement agreed in response to specific political, technological and economic circumstances. As these circumstances change, so money must change. Many people think that it is about to undergo a pretty significant change in the very near future as we come to the end of what economists call the current “Bretton Woods II” era of international monetary arrangements.

This is not the opinion of wide-eyed technologists obsessed with Bitcoin, by the way. Mark Carney gave a 2019 speech as governor of the Bank of England in which he said that a form of global digital currency could be “the answer to the destabilising dominance of the US dollar in today’s global monetary system”. But which digital currency? Will we really be choosing between the Federal Reserve and Microsoft (between dollar bills and Bill’s dollars)? Or between Facebook’s Libra and the Chinese Digital Currency/Electronic Payment system “DC/EP”? Between spendable SDRs or Kardashian Kash?

I think that the answer is yes, so we need to start planning for this coming era of digital currency. The historian Niall Ferguson wrote in 2019 that  “if America is smart, it will wake up and start competing for dominance in digital payments” and I am sure he is right. In fact, I’d go further and say that we could see a new cold war in cyberspace with, to choose some obvious examples, Facebook’s private currency facing off against China’s public currency facing off against a digital euro. Would a digital dollar win this new space race?

Again, it would be a mistake to see this as a technical debate about cryptocurrencies and blockchains, about hash rates and key lengths. It matters far outside the virtual boundaries of the new age. The Dollar’s dominance gives America the ability to exert soft power through the International Monetary and Financial System (IMFS). A serious implication of replacing existing monetary arrangements with new infrastructure based on digital currency is that this power might be constrained. Whether you think it might be a good thing or not, you need to think about what it means for you, your business and your country. After all, some observers are labelling the competition to provide the digital currencies of the future a new Space Race, and I think they may be right.

It seems to me that now that the technologists, the business strategists, the economists and both national and international regulators are beginning to glance in the direction of those alternatives, the whole topic of digital currency needs to be explored. In this book I will try to set out the economic and technological imperatives, discuss the potential impact on the IMFS and highlight a series of tensions—between public and private, between and, most importantly, between East and West—to contribute to the necessary high-level debate that we must have to begin to shape the IMFS of the near-future. And I’ll try to make a few positive suggestions about a national digital currency strategy.