A Little History
In 1918, after more than four years of bloody conflict in World War I, American President Woodrow Wilson presented his first concept of the League of Nations. His idea and motivation stemmed from the thought that countries may be able to mitigate future conflicts and avoid significant bloodshed through diplomacy, open communication, and international cooperation. Though the United States (US) did not join the League of Nations at the time due to congressional dismissal of the contract, it existed for 26 years with more than 60 member states and has since evolved into the United Nations (UN), which boasts 193 member states.
In a time of confusion and warring interests across Europe, Woodrow Wilson’s League of Nations provided a structure for stability and a platform for discussing shared challenges. Today, the UN has become a widely popular international organization, whose foundations for international peace and security were poured in the initial 1918 proposal. While many countries consider the UN to be deeply flawed, it plays an essential role in enabling international dialogue which no other institution offers. All UN missions serve significant positive purpose. But more than anything, the existence of the UN is critical to American security because it is a legacy of US leadership at a time of doubt. The agreements set forth by this international body deliver and uphold certainty about basic human rights. Like-minded member countries understand the critical nature of the UN in the world and appreciate its role in enforcing standards for human existence.
The Recent State of Affairs
While the UN held an influential role throughout the latter 1900s, it would be remiss to ignore fluctuating economic trends in its membership over time. In 1945, the victors of World War II were also the five largest economies in the world — together, they comprised two-thirds of global growth. Fast forward 75 years and the original five are slipping behind. Today, the permanent members of the UN Security Council represent only 50% of the global economy. If seats were assigned by GDP, Russia and France would have to step aside for Germany and Japan.
That kind of musical chairs is minor compared to what will play out over the next thirty years. By 2050, it is projected that the original P5 will control only 40% of the global economy. In order to align security and economic power as it existed in 1945, the permanent seats would be held by Brazil, India, Indonesia, the United States, and China. There are a number of reasons why UN edicts don’t pack the same punch they did two decades ago — and economics is one of the main factors.
The UN? Is it even relevant?
Even though some may say that the UN doesn’t have any teeth or that it is not as effective as it was set out to be, let’s take a second to think about an alternative world without this open forum for discussion and multilateralism. What if authoritarian governments had determined the rules of conflict and (likely) left out clauses about basic human rights? The soft power of the UN plays a substantial role in shaping our international community. As we become more closely connected with emerging technologies, guidelines developed by bodies like the UN become central to writing the modern playbook for liberal governments.
While private companies are increasingly playing an important role in determining global norms and transnational conduct, governments must keep pace. When it comes to digital currencies, this point is especially pertinent due to the rapidly increasing conflict between private innovation and public sector regulation.
The G-7 Framework – Applied to Digital Assets
For the US government, whose mission it is to ensure the security and prosperity of the US citizenry, it will be important to start thinking about how to revamp a “League of Nations-esque” agreement focused on digital assets. Since American power owes much to the US-centric financial system, policymakers already understand the necessity of US leadership in this endeavor. With privacy, security, inclusion, free markets, and rule of law at the heart of historical US prosperity, this body will drive a value-based approach to adopting guidelines for modern transactions and stores of value.
A similar strategy was taken by the Obama administration in 2012, when it offered a “a blueprint for privacy in an information age.” The Consumer Privacy Bill of Rights that it set forward was not a binding legal document. But it set the course and allowed policymakers to think about modern challenges with a modern framework of ethical understanding in the best interest of its citizens.
Though it may struggle at the outset to “have teeth” as it builds credibility and members, this Digital Assets Bill of Rights will set the founding principles for understanding the future of modern stores of value and mediums of exchange. The United States, just as it led the convention of the League of Nations, should once again take this initiative. While more technical details will have to be hashed out in the years to come, the basis of this group of like-minded countries must be established with a baseline of inherent human rights.
Establishing the Digital Assets Bill of Rights cannot wait for front-running stablecoins to develop first mover advantage and instead must be an initiative led by like-minded governments with Central Bank Digital Currencies (CBDCs). Former Governor of the Banks of England and Canada Mark Carney has commented on the existence of stablecoins and CBDCs, noting that if vigorous oversight and rules must exist for stablecoins, then “what would differentiate them from CBDCs?” Although the popularity of stablecoins has increased, in his view, “It’s not clear why a single CBDC wouldn’t perform better.” As a result, central banks around the world should be charged with adapting financial value systems to modern day technologies. They must work closely with finance ministries as well as the legislative branch to adapt their countries’ financial systems to CBDCs & stablecoins.
Though much thought will need to be given to developing these guiding principles, an initial set of these rights are as follows:
The Digital Asset Bill of Rights for Non-Authoritarian Countries
1. The right to remain separate from harm caused to society from digital assets (money laundering, etc.). This includes the establishment of a Digital Asset Framework modeled after the Financial Action Task Force.
2. The right to be left alone (privacy). This includes the creation of privacy safeguards for consumers to protect confidential information
3. The right to have access. This includes the prioritization of financial inclusion for financial services at low rates that all consumers can access.
4. The right to be informed on good computer hygiene and protection from cyber incursions. This includes a public and private sector partnership to deal with national security instances where illicit actors use digital assets to deploy ransomware.
5. The right to be educated. This includes an education campaign on digital assets for schools, industry, and non-profits to create more pockets of innovation.
6. The right to set standards. This includes the creation of a Central Bank Governor Working Group across like-minded countries (United States, European Union, New Zealand, Japan, and Australia) to create a digital asset Bretton Woods.
In the coming years, the United States needs to lead in value-setting, even if not to create its own digital dollar or CBDC framework. If it does not lead, it risks the potential of China taking the digital asset mantle globally and setting the rules of the road for the international community. As we enter a multipolar world, where a “basket of currencies” becomes more and more of a reality every day, the United States needs to be the world convener on digital assets rather than admiring their development from afar. No longer will white papers or domestic task forces be satisfactory. The United States should lead on a global stage as it has done during previous geoeconomic inflection points in history.
Michael B. Greenwald is Director at Tiedemann Advisors and Director for Digital Asset Education. He was the first US Treasury attaché to Qatar and Kuwait, acting as the principal liaison to the banking sector in those nations, while serving in two presidential administrations and under three treasury secretaries from 2010-2017. He is a fellow at Harvard Kennedy School’s Belfer Center for Science and International Affairs, and a Senior Fellow at the Atlantic Council Geoeconomics Center.