Central Bank Digital Currencies Spark Outrage; Dutch Queen Questioned
By Stefan J. Bos, Chief International Correspondent Worthy News
WASHINGTON/AMSTERDAM (Worthy News) -Dutch Queen Maxima has come under pressure over embracing central bank digital currencies (CBDCs), which could enable governments to control people’s spending.
Máxima, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), was a keynote speaker at last week’s annual IMF – World Bank meeting in Washington, D.C.
“If designed properly, CBDCs could hold great promise to support a digital financial system that works for everyone. But that is an important ‘if’”, Queen Maxima said.
“If designed and implemented with inclusion in mind, CBDCs could offer many options to expand access to the unbanked and to serve the vulnerable and the poor,” she explained.
However, “Maxima openly advocates for programmable money; power in central banks, without parliamentary accountability,” argued leading Dutch financial journalist Arno Wellens.
Yet she is “an unelected official who is outside politics under [Dutch] constitutional law,” he wrote on the social networking site Twitter. “This is a serious attack on democracy,” added Wellens, reflecting a broader debate in the Netherlands on government control and digitalization.
The deputy managing director of the International Monetary Fund (IMF), Bo Li, agreed with Queen Maxima that a CBDC could improve “financial inclusion” through programmability.
SMART CONTRACTS
“A CBDC can allow government agencies and private sector players to program, to create smart contracts, to allow targeted policy functions,” Li explained. “For example, welfare payments, for example, consumption coupons, for example, food stamps.”
“By programming CBDC, that money can be precisely targeted for what kind of people can own [CBDC] and for what kind of use this money can be utilized, for example, for food.”
Before joining the IMF, Li worked for many years at the People’s Bank of China, according to the IMF’s official website. Communist-run China has been working on a digital currency to counter the dominance of the U.S. dollar.
Critics say the CBDC could be misused to target people for not obeying government-imposed rules on, for instance, climate change, the environment, or during pandemics.
Additionally, people could also face sanctions for expressing views deemed dangerous, like in China, critics argue.
Experts such as Wellens fear it would be possible for authorities to limit what people can purchase or even freeze or cancel their accounts.
RESTRICTING FUNDS
By restricting access to funds, they are working against decentralization, which is one of the main advantages of adopting cryptocurrencies, experts say.
Nick Anthony, a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives, shares these concerns.
Anthony wrote on Twitter that the IMF executive’s remarks showed how a CBDC would “allow the government to precisely control what people can and cannot spend their money on.”
He noted that “governments have a historical pattern of misusing these tools,” citing Canadian Prime Minister Justin Trudeau’s move to freeze the bank accounts of anti-COVID-19 vaccine mandate protesters earlier this year.
Despite the controversies, a recent report
from the Bank of International Settlements (BIS) found that almost 90 percent of national central banks are planning to launch their own CBDC for release to the general public.
That reportedly includes the United States, where Washington is currently looking into the possibilities for issuing such a digital currency.
U.S. officials claim benefits, such as efficient and low-cost transactions, boosting economic growth, and improved access to the financial system. However, critics believe CBDCs will increase government control over the money that could be used as a tool for financial discrimination while simultaneously tracking purchases.