The new digital sovereignty: why payments and identity now shape national policy?
Money and identity are no longer separate domains—they are converging into the backbone of national digital infrastructure. As global monetary networks become the new frontlines of geopolitical competition, digitalization has shifted from innovation experiment to a lever of national power and policy. In this new era, payments and identity aren’t just technical challenges or regulatory checkboxes—they are the building blocks of economic sovereignty, resilience, and strategic influence.
Sovereignty: More than just the flag on the currency.
Dave Birch, in The Currency Cold War, makes a compelling case: the current monetary order—“Bretton Woods II”—is not a law of nature. It’s a fragile, temporary arrangement, propped up by legacy power structures and inertia. The dominance of international card schemes (Visa, Mastercard) and the omnipresence of the US dollar aren’t just inefficient—they’re vulnerabilities.
Why? Because the “exorbitant privilege” of the US dollar gives the US government outsized influence over global commerce. Sanctions, surveillance, and the threat of exclusion from global rails are not theoretical—they’re operational tools. For other nations, this means their economic policy space is dictated not by their own central banks, but by foreign tech companies and unpredictable geopolitics.
Takeaway:
National payment and identity infrastructures must be designed for autonomy, not dependency. Outsourcing core rails to foreign networks is a strategic risk.
Resilience: Payments as Critical National Infrastructure.
The COVID-19 pandemic and a wave of cyber outages have made one thing clear: payment networks are not just commercial services, but critical infrastructure—on par with electricity, water, or broadband. When payments fail, commerce halts, wages go unpaid, and social order can fray.
A country without a resilient domestic payment scheme risks being “permeated”—its legal tender rendered irrelevant by reliance on someone else’s rails. Resilience is not just redundancy, but adaptability: building systems that can withstand shocks, adapt to new threats, and continue to function in crisis.
Offline-capable Central Bank Digital Currencies (CBDCs) are emerging as the digital equivalent of cash under the mattress. In a crisis—whether cyberattack, disaster, or conflict—offline digital currency provides continuity, ensuring that commerce can continue even when networks go down.
Takeaway:
Treat payments like water or power: invest in redundancy, offline capabilities, and next-generation cryptography to ensure continuity in any crisis.
Mobile money & identity: A seamless socio-technical stack.
Payments and digital identity are converging into a new paradigm: money becomes what identity does. Reputation, credentials, and data are not just background—they are transactional assets. Payments and identity are two sides of the same coin.
You can’t have sovereign, resilient payments without sovereign, resilient identity infrastructure. Open-loop transit, domestic wallets, and inclusive KYC schemes are not just convenient—they’re foundational to democratic access to the digital economy. Think of India’s Aadhaar and UPI: together, they’ve created a socio-technical stack that enables instant payments, digital inclusion, and scalable public services.
Takeaway:
Integrate identity and payments from the ground up. Build inclusive, privacy-centric stacks to enable secure digital participation for all citizens.
Final thought: Payments and identity are now policy tools.
What emerges is a new kind of international competition—not over aircraft carriers, but over API endpoints, data standards, and regulatory influence. Engage in global standards-setting and digital alliances to shape the rules, not just follow them.
The pace of change is accelerating. Legacy rails are reaching their limits, and the new digital gameboard is being set. Those who invest in sovereign, resilient, and strategically aligned payments and identity infrastructures will shape the rules of tomorrow’s economy. The rest risk being left on the sidelines—tenants in someone else’s system.
If you don’t own your identity system and your payment rails, you don’t have sovereignty—you have tenancy. And in the coming currency cold war, tenants don’t make policy.
The next decade in payments and identity is about more than technology—it’s about power, policy, and the future of the digital nation-state. The question is: will you be a tenant, or will you be a sovereign?
