Bad News: Centralized Control Over Money
The former CTO at Coinbase, Balaji Srinivasan, recently expressed his concerns about the centralized control over money through central bank digital currencies (CBDCs). He criticized the statements made by the General Manager of the Bank of International Settlements (BIS), Agustín Carstens, who claimed that central banks will have absolute control over the use of money. Srinivasan argued that this level of control is undemocratic and akin to communism.
Key Points:
- CBDCs give central banks complete control over the rules and regulations governing the use of money.
- This level of centralized control goes against the principles of economic freedom.
- Power tends to corrupt, and absolute power corrupts absolutely.
- CBDCs could potentially restrict individuals’ ability to make even basic transactions, like buying a cup of coffee.
- A recent survey conducted by the BIS revealed that a significant number of central banks are actively involved in CBDC-related work and testing.
Good News: Increased Adoption of CBDCs
In 2022, the BIS survey found that 93% of the 86 central banks surveyed were engaged in CBDC-related work. More than half of these central banks were already conducting tests and pilots. This indicates a growing interest and potential for wider adoption of CBDCs in the future.
Hot Take: Preserve Economic Freedom
While CBDCs may offer certain benefits, such as increased efficiency in cross-border payments, it is crucial to consider the potential negative implications of centralized control over money. It is important to preserve economic freedom and prevent the concentration of power in the hands of unelected bureaucrats. Striking the right balance between innovation and individual liberties should be the focus when exploring the use of CBDCs.
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