DeSantis is right — CBDCs will lead to absolute government control

Arguing over the prudence and implications of issuing a central bank digital currency (CBDC) in the United States has seemingly become one of Washington’s favorite icebreakers. As Congress considers the question, it is critical that Americans clearly understand and soberly consider the immense power a CBDC could grant governments as well as the unacceptable risk of that power’s potential abuse. 

In March, Florida Governor Ron DeSantis introduced a proposal to ban CBDC use in his state, arguing that total monetary control by the federal government is dangerous for American society. Shortly after, the White House released its economic report in which it argued in favor of a CBDC as a mechanism for advancing “human rights, democratic values, and privacy.” The fact that many countries and monetary systems have begun to develop and issue their own CBDCs colors the domestic debate as well.

While no technology is inherently evil, the consequences of various technologies’ potential misuse varies considerably. So too a CBDC system is, at heart, merely a tool — not inherently good or bad on its own. But the downside risk of a CBDC’s misuse is so immense that the concept should be rejected. The idea of completely centralizing “absolute control” over people’s ability to engage in commerce via a CBDC should be anathema to free societies — even if the prospect of that power’s misuse seems outlandish today.

But in the United States, at least, it’s not outlandish. It would be naive to ignore America’s long journey of developing an increasingly pervasive financial surveillance system, as well as the possibility of a CBDC being used for the same purpose. America’s policymakers have a chance now to arrest that trajectory and build a better system that more consistently respects citizens’ right to privacy.

Related: White House report takes aim at Bybit — and forgot about Deribit

Proponents of a CBDC argue that it could advance financial inclusion and improve the efficiency of payments. They’re right, but the key issues here are what potential cost this might come with and whether or not there are alternatives available to accomplish the same objectives with fewer risks. Luckily, in this case, alternatives are numerous and extraordinarily varied: Ideas range from decentralized finance (DeFi) protocols to postal banks.

Critically, these alternatives can accomplish many of the core…