Open Banking: A Path to CBDCs and Erosion of Financial Privacy?

Credits: Competition Bureau recommends open banking to bolster competition

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Open Banking: A Path to Financial Control by Government and Erosion of Privacy?

As Canada's Competition Bureau advocates swiftly implementing an open banking framework, major concerns are emerging about the unintended consequences. While promoted as fostering innovation and competition in financial services, open banking could lead to an erosion of financial privacy and unprecedented government control over citizens' economic participation.

Infrastructure for Government Surveillance and CBDCs

A core issue is that open banking may facilitate the adoption of central bank digital currencies (CBDCs) by providing the required digitally integrated financial system infrastructure. Sharing consumers' data across platforms concentrates informational power in governments' hands.

CBDCs could grant authorities unparalleled visibility into all transactions, raising alarming privacy violations. Nebulous "financial inclusion" rhetoric from groups like Open Banking Excellence hints at deploying opaque social scoring systems to dictate individuals' economic access based on any criteria - not just creditworthiness.

Debanking and Financial Blacklisting

Recent examples foreshadow how an open banking system merged with CBDCs could enable asset freeze punishments from governments against citizens for any perceived infraction. UK politician Nigel Farage was abruptly debunked by his institution, unable to access funds or credit - not due to a crime but for voicing unpopular views.

This "financial blacklisting" has occurred during COVID lockdowns with blocked digital passes, in China's banking crises, and against celebrities for controversial speeches. It demonstrates how financial services could transform from neutral utilities into tools of control and coercion by the state.

Data Security Risks and Power Consolidation

Beyond the surveillance dangers, open banking's data-sharing requirements across entities increase cyber risks like breaches and identity theft. There are also concerns that it could consolidate power among large banks and big tech companies that leverage the data most effectively - the opposite of fostering competition.

As Canadian policymakers weigh an open banking framework, they must implement robust protections to uphold privacy rights and financial freedoms. Unbridled data sharing without safeguards risks opening Pandora's box, enabling governments and concentrated corporate power to control participation in the economy itself as a means of manufacturing obedience from the masses.

Financial innovation should empower individuals, not centralize power structures. Policymakers must responsibly unlock open banking's benefits without compromising core democratic principles and civil liberties. Failing to achieve this balance could see nominal economic reforms pave the way for authoritarian financial overreach.

Also Read: Canada to Incorporate Social Scores in Banking

Want to Learn More?

To learn more about the potential risks associated with open banking and how it may impact your financial situation, contact me at aspitters@pfcwealthsolutions.com or use my Calendly Link. Together, we can navigate the evolving financial landscape and ensure your wealth remains protected and aligned with your long-term goals.

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