CBDCs: A New Era of Financial Surveillance & Control

  • AUTHOR: editor
  • POSTED ON: May 12, 2023

Central Bank Digital Currencies (CBDCs) have been a hot topic in the world of cryptocurrencies, and understandably so. Technology is becoming more prevalent, and countries are starting to consider developing their own versions of CBDCs.

In a recent speech at the Consensus conference, J. Christopher Giancarlo, the former Commodity Futures Trading Commission Chairman, discussed his desire to see the United States lead in developing a “freedom coin” – an American-style CBDC that protects privacy and economic freedom.

Giancarlo has been working on the Digital Dollar Project, a non-profit “initiative to advance exploration of a U.S. central bank digital currency” to ” catalyze” a CBDC for many years. Essentially, he’s been pushing for the United States to lead the world in creating an “American Style” CBDC that protects privacy and economic freedom. Giancarlo calls such a CBDC “freedom coin” in an American Enterprise Institute paper he co-authored with DDP Advisory Group member Jim Harper.

The Issues with Giancarlo’s Speech

j. christopher giancarlo

Unfortunately, there are several issues with Giancarlo’s approach.

Firstly, he is aware that the current regulatory framework in the United States is not conducive to ensuring privacy or freedom when introducing a U.S. CBDC. This framework is based on the Bank Secrecy Act of 1970 and the Supreme Court’s third-party doctrine, which have rendered Americans’ constitutional rights irrelevant regarding financial transactions.

Giancarlo stresses the importance of creating a CBDC that upholds law enforcement’s needs and the right to individual privacy and economic freedom enshrined in the Constitution’s Fourth Amendment. However, the balance should have already been provided by the Constitution. Unfortunately, Congress, the courts, and regulatory agencies have all overlooked it. Hence, if Giancarlo truly desires to reinstate equilibrium, he must advocate for substantial revisions, if not the total abolition of the Bank Secrecy Act.

Without removing, at the very least, financial institutions might be held legally responsible to share customer’s data with law enforcement without a valid search warrant, it is pointless to talk about a CBDC that respects Americans’ constitutional rights.

Giancarlo’s definition of a CBDC as a “government-backed, digital bearer instrument” in his AEI paper is his marketing pitch and not an objective definition. Additionally, no central bank has expressed interest in allowing anonymous CBDC transactions, and the Fed-MIT project officially does not endorse any particular technology or approach.

More than 60 nations are currently making strides in adopting a CBDC, but none of them has chosen to go with digital bearer instruments. Recently, Christine Lagarde, the President of the European Central Bank, reiterated that central bankers are not inclined towards CBDCs that permit anonymous cash-like transactions.

Why a U.S. CBDC May Not Be The Answer To Enhancing Economic Freedom And Financial Privacy!


Nevertheless, central bankers recognize the potential of CBDCs in enhancing monetary policy as they are programmable. These digital currencies can be programmed to restrict or incentivize people’s spending based on macroeconomic objectives.

But even if a CBDC could achieve these policy aims while coexisting with cash and other alternative monetary instruments, it’s hard to see how anyone could associate this policy tool with preserving economic freedom. In reality, a fully functional CBDC can’t coexist with alternative instruments as any viable alternative, including cash, would allow people to exercise their will instead of spending based on central bankers’ plans.

So, instead of pushing for the U.S. to lead the world in designing a CBDC, Giancarlo should promote a regulatory framework protecting privacy and economic freedom. The U.S. still does a better job than many other countries in protecting these values, making it easier for people to improve their lives. This is why people place such a high value on the U.S. dollar, not because of the inner workings of electronic payments.

The introduction of a U.S. CBDC is not on the immediate horizon. Lawmakers should instead concentrate on enhancing economic freedom and financial privacy by enacting better legislation in the private sector.

The Takeaway

In conclusion, the development of CBDCs is a complex issue with many potential consequences. While the idea of a “freedom coin” that protects privacy and economic freedom may be appealing, it’s essential to consider the current regulatory framework and the potential implications of creating such a coin.

Rather than advocating for a CBDC that may not offer adequate safeguards, policymakers should concentrate on enhancing financial privacy and economic liberty through the private sector via more effective legislation to ensure that individuals have the necessary tools to exercise their constitutional rights in the digital age.

Updated May 12, 2023
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