Central Bank Digital Currencies (CBDCs) are coming. History shows that technology has never been stopped, nor restrained, for a significant length of time.
Governor Christopher J. Waller commented on some of the risks and benefits that CBDCs can offer. He weighed ideas such as security concerns and how foreign and domestic CBDCs would impact the vital role the American dollar has on the world economy. It appears the Fed is trying to convey their careful consideration of its efficacy and usefulness. Per the Governor, in January of this year:
The Federal Reserve Board published a discussion paper on CBDCs to foster a broad and transparent public dialogue, including the potential benefits and risks of a U.S. CBDC. To date, no decisions have been made by the Board on whether to move forward with a CBDC.
He goes on to proclaim:
But my views are well known. As I have said before, I am highly skeptical of whether there is a compelling need for the Fed to create a digital currency.
Whether for show, pretending the Fed is still on the fence regarding CBDCs, or if he truly is skeptical is unclear. But governments and central planners have no limits when it comes to interfering with the economy and lives of others. When confronted with a technology that will only enhance the powers of the planner, we can be confident the planner will jump at the opportunity.
In his speech, he failed to mention other innovations that CBDCs could offer, such as the ability to track payments, block transactions at will, and set expiry dates on money itself.
If it sounds far fetched, read an excerpt from a paper published by the Bank of Canada last December:
An inconvenient aspect of physical cash is that it can be lost, and there is no way to recover it. We consider a potential feature to solve this problem for offline digital cash: an expiry date to automate personal loss recovery. With this feature enabled, digital cash could not be spent after its expiry date.
Naturally, they try justifying this by claiming:
Consumers whose digital cash expired would automatically receive the funds back into their online account without having to file a claim.
Notice the spin, that, unlike cash which can be lost, if you were to somehow lose your (presumably digital) wallet, then after a set amount of time the money expires and the individual receives the funds again.
Such situations could be useful; yet, there are two sides to every technology.
Consider the “weakening of consumer demand,” according to the Fed. It’s possible they will set expiry dates on CBDCs, forcing people to spend money by a set date in order to “stimulate the economy.” They wouldn’t admit this yet. But once the technology is in place, nightmare financial scenarios such as this could become reality, masquerading as short-term measures or necessary policy decisions.
Either way, once the wheels of progress, or devolution, are in motion, they won’t be stopped. Central banks of the world will continue publishing papers on the pros and cons of CBDCs, and then one day, we’ll wake up to find we’re living in a cashless society.
