3 - 4 minute read
The hotly debated topic of central bank digital currency (CBDC) issuance has captured the attention of policymakers in the United States, with Florida Governor Ron DeSantis leading the charge against this technology. DeSantis has introduced a proposal to ban CBDCs in his state, arguing that total monetary control by the federal government is dangerous for American society. Conversely, the White House has argued in favor of CBDCs as a mechanism for advancing “human rights, democratic values, and privacy.” The debate has intensified as more countries and monetary systems are developing and issuing their own CBDCs. This article argues that the potential risks of a CBDC outweigh the benefits and calls on Americans to reject this technology.
The downside of CBDC misuse is so immense that the concept should be rejected. A CBDC would grant a government total and unchecked surveillance into a person’s financial life, down to every cent spent. It could also allow a government to prohibit an individual from engaging in commerce or delete the assets of a disfavored individual or group. Such power accessible via a few keyboard strokes is unacceptable in a free society.
Alternatives to CBDCs are numerous and extraordinarily varied, ranging from decentralized finance (DeFi) protocols to postal banks. These alternatives can accomplish many of the core benefits that proponents of CBDCs point to while avoiding the downside risk of creating a system that, if abused, could undermine individual rights in a way few technologies ever could.
The article warns that examples using the decentralized financial system we rely on today also warrant caution. In China, citizens who shared pictures of a banner condemning Chinese Communist Party General Secretary Xi Jinping lost access to their WeChat accounts. Similarly, the Canadian government used emergency powers to order banks to freeze the accounts of people participating in protests the government deemed unlawful last year. These actions were taken using a system that is unwieldy compared to the brutal efficiency of a CBDC.
Therefore, Americans across the political and ideological spectrum should find common cause in rejecting the issuance of a CBDC. The possibility of such a powerful tool being used for unlawful, immoral, or restrictive reasons on a societal scale means that the idea of issuing one warrants extreme suspicion, if not outright rejection.
In conclusion, CBDCs may promise financial inclusion and improved payment efficiency, but the potential cost of these benefits is too high. Policymakers must consider the immense power a CBDC could grant governments and the risk of that power’s potential abuse. Traders should be cautious about investing in assets or companies that may be impacted by the issuance of CBDCs.