There’s a quiet movement behind a new idea for government technology gaining momentum in technocratic pockets of Washington, D.C.: a central bank digital currency, or CBDC. But some Republicans want to block this potentially authoritarian tool from ever becoming a reality.
The idea of a CBDC sounds innocuous enough. It would simply be a “digital dollar” issued by the Federal Reserve, America’s central bank. Its supposed benefits include everything from saving trees to reducing administrative costs. But the downsides of a CBDC are potentially dystopian — which is why lawmakers such as Sen. Mike Lee (R-UT) want to keep them confined to the realm of imagination.
The Utah Republican just introduced the “No Central Bank Digital Currency Act,” which would prevent the Federal Reserve and Treasury Department from directly offering a CBDC to citizens. This is a step worth taking.
Why? Well, for one, a CBDC would enable levels of government surveillance that belong in an Orwell novel.
Think about it like this. Right now, no centralized authority knows how many $100 bills you have in your wallet. Nobody knows what you spend your money on or where you spend it. The existence and uniform acceptance of cash, which a CBDC would eventually replace, enables a degree of financial privacy we take for granted. But if your only option for spending money was a “digital dollar,” then a centralized authority, such as the Fed, would potentially be able to monitor your every financial move.
“Those calling for the rollout of a CBDC are naive to believe that this can be done without establishing a centralized surveillance system for all financial transacting,” Bitcoin Policy Institute’s Natalie Smolenski explains . “Quite simply, even if such surveillance is not included in the [initial] design, it would be trivial to add it at a later stage. Once a door to surveillance is opened, it is virtually impossible to close.”
Unless you want to give Big Brother a direct line into your wallet, you must oppose the creation of a CBDC. A CBDC would also give the government new ways to exert social control.
Bureaucrats could condition the dollars to be spent only in certain ways, for example, such as limiting the amount of gasoline you’re able to buy in the name of fighting climate change. As the Cato Institute explains , this idea of “programmable spending” enabled by a CBDC is ripe for abuse and could give the government new levels of control over our everyday lives.
And this is just the tip of the iceberg. A CBDC would also make it much easier for the government to freeze people’s assets or otherwise lock “bad” people out of the economy. What’s more, it would enable new levels of macroeconomic meddling by government bureaucrats — as if we haven’t seen that fail enough in recent years — through which the government could force people to spend, not save, their money or see it disappear.
All of these dystopian possibilities are enabled by a CBDC, while it does not actually provide any serious upsides not already offered by existing digital finance systems or cryptocurrencies. Hence why the Cato Institute concluded , “The potential consequences of a CBDC are simply too large to be left up to the discretion of unelected bureaucrats at the Fed or the Treasury.”
Indeed they are. Here’s hoping Republicans rally around Lee’s legislation and take this dystopian government technology off the table.