At a recent World Economic Forum event held in China, economist Eswar Prasad heralded the potential benefits of a Central Bank Digital Currency (CBDC), aka, a “digital dollar.” But, intentionally or not, he actually made the case for why this technology is dangerous and could be abused in authoritarian ways.
First, let’s be crystal clear about what exactly a CBDC is. It’s essentially a government currency, like the dollar, that is completely digital, and issued by the government through a central bank.
On the surface, having a “digital dollar” sounds like it could boost efficiency. For example, the government wouldn’t have to mail people “stimulus” checks—it could just drop the digital dollars into their account with the press of a button. But that level of “efficiency” comes with complete control, as Prasad explained.
World Economic Forum In China Last Week…
CBDC's Could Be Programmed By Governments To Prevent Purchases It Deems Undesirable…
"Like Ammunition, Drugs & Pornography" pic.twitter.com/zyHOiLdgwX
— Spiro (@Spiro_Ghost) July 5, 2023
“We are at the cusp of physical currency essentially disappearing,” the economist said at the WEF event. “If you think about the benefits of digital money, there are huge potential gains…It’s not just about digital forms of digital currency; you can have programmability — units of central bank currency with expiry dates.”
By this, Prasad means that your money could be “programmed” so that you must spend it by a certain date or it disappears. The government could also exercise this control over what you can buy with your money, too.
“You could have […] a potentially better — or some people might say a darker world — where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like say ammunition, or drugs, or pornography,” Prasad said, “And that is very powerful in terms of the use of a CBDC, and I think also extremely dangerous to central banks.”
This is the major danger of a CBDC. With a cash-based system, while the government ultimately creates the currency, it cannot control how people use it once it’s out there. However, with a CBDC, politicians could quite literally block you from spending money on “undesirable” things. And, rest assured, when political elites have power at their disposal, they always find a reason to exercise it.
It could be the “climate emergency” that justifies them blocking you from purchasing more than an allotted amount of gasoline. It could be the threat of “extremism” that justifies them from blocking you from purchasing certain books with “dangerous” ideas. And so on.
Ultimately, the “programmability” of a CBDC that its advocates tout as a benefit is actually the technology’s biggest—and most dangerous—flaw. If our financial system is eventually migrated to digital government currency, “our money” won’t really be our money anymore. And that alone is reason enough to oppose it.
Like this article? Check out the latest BASEDPolitics podcast on Apple Podcasts, Spotify, or below: