How will central bank digital currencies be used for political repression in your country? Cryptocurrency scrgruppen
Central bank digital currencies (CBDCs) have emerged as a prominent topic in the world of finance. It promises to increase stability, security, efficiency and reduce corruption. Central banks, the International Monetary Fund, the World Economic Forum, and the World Bank tell us that central bank digital currencies are the panacea waiting to cure everything that ails our financial system.
Unfortunately, these claims may not match reality, because there are two characteristics of CBDCs that their proponents don’t often mention. First, they provide an eternal stream of data about how you spend your money. Second, it is subject to “programmability,” meaning that political leaders will have the power to decide whether or not you are allowed to spend your money.
Data trail
As an electronic fiat currency issued by central banks directly to your digital wallet, CBDCs will not be anonymous. Customers will have gone through identification processes identical to those currently imposed by commercial banks. Design cases may vary in detail, but either commercial banks, the central bank, or both will be privy to who holds the digitally issued fiat currency, how it is spent or transferred, to whom and for what purpose. All this information will be stored in a central digital ledger managed by central banks.
Related: Central bank digital currencies threaten our future, so it’s time to take a stand
This system will enable central banks to compile a record containing the financial transactions of every citizen, from the cradle to the deathbed. While proponents may ignore these concerns, it is possible that governments may be interested in citizens’ political affiliations, religious donations, mental health, and other personal details. Public health services may monitor alcohol and cigarette purchases as well as lifestyle choices to adjust insurance premiums. Even the CO2 impacts of purchases can be tracked so that environmental policies can be amended, greatly compromising the privacy of citizens’ data.
Limitations and programmability
The fact that retail CBDCs are electronic cash held by a central bank will radically change our legal ties to our money: with physical cash, we are always the owners and holders of those coins and notes in our pockets. With a CBDC, we will only be the owner of digital cash. We will never be holders of this money because it will be held in our name at the central bank.
The corporation is trying to force me out of the UK by closing my bank accounts.
I was given no explanation or recourse as to why this happened to me.
This is serious political persecution at the highest level of our system.
If they could do that to me, they would… pic.twitter.com/O4xQ1h79ub
– Nigel Farage (@Nigel_Farage) June 29, 2023
Therefore, we will never have complete discretion over that money, as the central bank will always be the intermediary between us and our money. If that broker refused to transact on our behalf, we wouldn’t be able to buy or transfer any money in a world where central bank digital currencies eventually replaced physical cash. We will no longer be able to pull a banknote from our wallet and hand it to whomever we want.
In short, every Central Bank Digital Currency (CBDC) transaction can be subject to restrictions. Such violations can take the form of payment limitations or transfer limits, and may prevent us from sending funds to specific groups of people, individuals, organizations or businesses.
Vice versa it can also prevent us from receiving funds. Furthermore, this can limit the purposes on which we spend our money, for example, spending limits or payment bans can be imposed on alcohol or cigarettes, but also fuel, electricity or airline tickets – as the government sees fit.
Defunding opposing voices – as Canadian Prime Minister Justin Trudeau did with members of the Freedom Flotilla in 2022 – will therefore become more convenient and efficient for governments. There will be no need to issue orders to freeze the accounts of companies or individuals at banks or payment service providers. Alternatively, the administration can deprive any protesters of their money with the push of a button.
Related: The world may face a bleak future thanks to central bank digital currencies
It is even conceivable that central bank digital currencies could be used to impose curfews or place people under house arrest. At the push of a button and in real time, CBDCs can, for example, be programmed to only operate between 6am and 6pm, or within just four miles of your registered home address. Effectively, President Joe Biden could use the central bank digital currency (CBDC) system to prevent a Donald Trump rally. Alternatively, Trump could block the Bernie Sanders meeting.
But silencing dissent doesn’t end there: CBDCs can also be programmed to depreciate in value over time. This may be useful to officials in times of economic decline when governments and central banks want to boost the economy. It goes without saying that in this scenario, the goalkeeper is the one left holding the short end of the stick. Governments can also impose special taxes, force loans, or directly access digital wallets to collect taxes and deduct fines. There is no doubt that financial independence will be eroded under a central bank digital currency system.
The veil of ignorance
However, alongside restricted freedoms regarding data privacy and financial independence, another, more fundamental, danger looms. People in power may undermine democracy by abusing central bank digital currencies to seize electronic power. If those who roam the corridors of power have the opportunity to literally shut down the opposition by defunding it, it will happen sooner or later. Or to put it more simply: Giving governments central bank digital currencies (CBDCs) and hoping they won’t be abused is like pouring an alcoholic a glass of whiskey and hoping he doesn’t drink it.
Hence, when weighing the pros and cons of retail CBDCs, the concept of the “veil of ignorance” becomes useful. When applied to the case at hand, it makes you consider not only the question of whether your current government is inclined to abuse CBDCs, but whether any future governments (behind the veil) could do so.
Think of the worst possible governments and consider whether they would abuse their power over central bank digital currencies. You’ll understand why central bank digital currencies represent an imminent threat to freedom – in your country and around the world.
This article is for general information purposes and is not intended and should not be taken as legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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