If Money Is Speech, CBDC Should Be Tools for Freedom
There is no constitutional right guaranteeing that you can spend your money as you please. Although there should be, and there's precedent for thinking that money is akin to speech and spending it (within the bounds of established law) a form of expression.
This particular problem has come to light as the U.S. government studies a potential central bank digital currency (CBDC). A digital dollar, as it is sometimes called, is essentially a way to make an internet-native version of cash and coins.
Central bankers, if they support CBDCs, often point to the greater control a state-run monetary ledger affords over microeconomic and macroeconomic policy. A digital dollar could help automate tax collection, streamline welfare payments and inform decisions around setting interest rates.
Like everything else in the internet age, CBDCs are about big data: State-run ledgers would give near-complete insight into how money is being spent in a country. In fact, Agustin Carstens, general manager of the "central bank of central banks," the Bank of International Settlements, said:
"We don't know who's using a $100 bill today and we don't know who's using a 1,000 peso bill today." With CBDCs, that would be possible, he noted.
That's quite dystopian for anyone who thinks there ought to be a measure of financial privacy – the same privacy afforded today by physical cash. Further, because CBDCs are mostly just research projects at this stage, they invite a high degree of skepticism and conspiracy theories.
Namely, people are worried "Govcoins" could become tools for coercion or censorship.
"Should people be encouraged to eat the foods decided best for them, such as a plant or insect-based diet? CBDCs could do the trick. Should people be limited in how much they can spend per week on carbon-intensive purchases? CBDCs could help with that too," N.S. Lyons, author of The Upheaval Substack, wrote last week in conservative-leaning digital mag City Journal.
It shouldn't be controversial to say that governments want insight and oversight over monetary flows. They enact policies that degrade privacy and set limits around how money can be spent; often in service of the noble aim of combatting terrorist financing and money laundering.
Lyons' concerns are certainly, technically possible with CBDCs. In fact, Rohan Grey, assistant professor at Willamette University, said it's already an established trend with some types of government-issued digital money. In the U.S., for instance, food welfare programs like EBT SNAP? set barriers around what can be purchased as well as time-limits within which the benefit must be spent.
"I could certainly imagine a CBDC enhancing individual choice and wellbeing, etc., but probably only if designed with that in mind. Likewise, it's not hard to imagine a CBDC being abused in some jurisdictions," Matt Homer, executive in residence at Nyca Partners and former executive deputy superintendent at New York State Department of Financial Services, told me over Telegram.
Read the full article here.
–Daniel Kuhn
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