Arguing about the wisdom and consequences of launching a central bank digital currency (CBDC) in the United States appears to be one of Washington’s favorite icebreakers. As Congress addresses the issue, it is vital that Americans understand and weigh the enormous authority that a CBDC potentially offer governments, as well as the unacceptable possibility of that power being abused.
Florida Governor Ron DeSantis proposed a CBDC prohibition in his state in March, stating that absolute monetary control by the federal government is hazardous for American culture. Shortly after, the White House issued its economic report, which advocated for a CBDC as a vehicle for improving “human rights, democratic values, and privacy.” The fact that several countries and monetary systems have begun to produce and issue their own CBDCs adds a new dimension to the local discussion.
While no technology is intrinsically wicked, the implications of possible technological misuse vary greatly. A CBDC system, similarly, is essentially a tool that is neither good nor bad on its own. However, the negative consequences of CBDC usage are so severe that the notion should be rejected. The concept of entirely centralized “absolute control” over people’s freedom to engage in business via a CBDC should be anathema to free societies — even if the likelihood of such authority being abused today appears absurd.
But, at least in the United States, it’s not outlandish. It would be foolhardy to dismiss America’s lengthy trek toward a more ubiquitous financial monitoring system, as well as the likelihood of a CBDC being utilized for the same reason. America’s politicians now have an opportunity to reverse that trend and develop a better system that consistently respects people’ right to privacy.
Proponents of a CBDC say that it will enhance financial inclusion and improve payment efficiency. They are correct, however the essential problems here are the possible costs and whether or if there are alternatives available to achieve the same goals with less risks. Fortunately, in this instance, there are various and quite diverse options: Decentralized finance (DeFi) protocols and postal banks are examples of ideas.
Critically, these options can provide many of the basic benefits that CBDC supporters tout while avoiding the adverse danger of creating a system that, if exploited, has the potential to harm individual rights in ways that few technologies have. A CBDC could not only allow the government total, unchecked surveillance of someone’s financial life — down to every cent spent — but it could also allow the government to, for example, prohibit an individual from engaging in commerce entirely or literally delete the assets of some disfavored individual or group of individuals. No government should be able to wield such power with a few keystrokes.
Examples utilizing the (compared to a CBDC-based system) decentralized financial system on which we rely today are likewise cause for concern. Chinese people who uploaded images of a banner denouncing Chinese Communist Party General Secretary Xi Jinping on WeChat lost access to their accounts in 2022. Because WeChat is a “do-everything app” that is extensively used as a payment mechanism, suspended users were unable to do simple operations such as contacting cabs or purchasing groceries.
Disclaimer: The information provided is not trading advice, Bitcoinworld.co.in holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.