Like, hate, or fear them, central bank digital currencies (CBDCs) are on their way. There will be no stopping them. From Sweden to Thailand and China to Canada, governments the world over are experimenting with CBDCs. While most are being undertaken as pilots at this stage, China’s is all but ready for primetime.
Social Credit on Steroids
The digital dollar and yuan will be a boon to governments seeking greater oversight into monetary movements, with real-time insights into how and where funds are deployed. But these instruments could prove catastrophic for ordinary citizens, further eroding their privacy while increasing inequality.
CBDCs are everything that cash is not: easily surveilled, censored, and apportioned to those deemed “worthy” of participating in this new digital economy.
Social credit – the notion that citizens must prove themselves eligible for inclusion by kowtowing to the will of the state – is already here, and it’s not just confined to authoritarian regimes. “If the Communist Party [of China] deems you to be untrustworthy, you are denied access to plane tickets, train tickets, opening and operating businesses, and more,” writes Andrew Torba.
The Gab.com founder knows what it’s like to be on the wrong end of social credit scoring after Visa blacklisted his business and his entire family for creating the free speech network. At present, financial discrimination is deployed by payment processors at the behest of governments. In a world of CBDCs, governments won’t even need to lean on third parties, as they did when forcing payment providers to withdraw their support for Facebook’s Libra. They can just push a button and freeze out firms that don’t toe the party line.
Whether your project is in the business of free speech or 3D printing, it’s all too easy to fall afoul of the powers-that-be. And don’t think that citizens are exempted either; woe betide anyone who should have cause to send funds to a relative in Iran or Cuba….