By Antonio Graceffo
Sovereign digital currency will give the government complete control over the economy of people’s private lives.
The British government announced that it would be phasing in a sovereign cryptocurrency. It also said that citizens would be limited to 20,000 digital pounds. The motivation to move toward a national cryptocurrency backed by the Bank of England is to compensate for a fractured digital payment sector dominated by large private technology companies. The U.S. Federal Reserve and the European Central Bank are each looking into establishing a central bank digital currency (CBDC) of their own.
British officials said that a CBDC was needed to “avoid the risk of competing, non-interoperable systems operated by tech giants or banks and would drive future innovation.” This statement is an admission that the central bank wants to eliminate competition. Second, it makes a faulty claim that by eliminating competition, it would “drive future innovation.”
Historically, it’s competition that drives innovation. If one company wants to compete with another, it finds a way to provide a better and more efficient service. When one company innovates, the other companies in the sector have the option of exceeding that innovation or collapsing. Eliminating competition removes the incentive to innovate, because customers have no choice but to use the service being offered, for better or worse.
Government services have no impetus to innovate. Companies like Amazon and FedEx continue to figure out how to deliver packages faster, cheaper, and more efficiently than the postal service. Government workers and companies with guaranteed income have little reason to improve efficiency. As much as profit-driven private companies are vilified in the popular press, their profit-driven initiatives benefit customers.
Apart from the lack of innovation, there are also issues of control. Central government banks want the power to regulate the money supply and the value of the currency. A government could decide which platforms are allowed to handle its cryptocurrency and could even prevent exchanges with other cryptocurrencies. Consequently, it’s possible that the introduction of governmental crypto would mean the death of private crypto.
Historically, it’s common for countries to have laws prohibiting transactions in currencies other than the government currency, so it’s reasonable to assume using foreign digital currencies may be banned, too.
But this could also be an opportunity for governments to selectively legitimize some nation’s crypto because governments would be able to determine which country’s currencies were convertible and which weren’t. The European Union, Britain, and the United States, for example, could all agree that their CBDC were mutually convertible, but they could decide to exclude Russia and Iran. This would mean that if countries wanted to bypass sanctions and purchase oil from Iran or Russia using cryptocurrency, there would be no way to pay for it.
The sanctions imposed on Russia included preventing cryptocurrency platforms from accepting rubles. If the world depended on digital currencies, sanctions completely blocking a country’s ability to engage in any commerce could be imposed. And, of course, this could happen to private citizens as well. Alongside terrorists, truckers protesting in Canada and coalitions of parents opposed to vaccine mandates and critical race theory could have their access to money cut off.
A government cryptocurrency also would work well for forced wealth redistribution and the World Economic Forum’s “Great Reset.” Britain is limiting citizens to 20,000 pounds of CBDC. By permanently setting a limit of 20,000 pounds, and then phasing out paper money, the government could make everyone equal.
Conspiracy theorists, preppers, and others who believe they’ll bypass government crypto say they’ll “live off the grid” by transacting on the black market with private crypto, gold and silver, or bartering. But private crypto will not likely be convertible into government crypto. So there would be no way of obtaining private crypto. Additionally, most businesses wouldn’t accept it if it meant risking being kicked off of government currency platforms. Gold and silver are fine if you have enough to last you a lifetime. If not, then the only way to buy it would be by using government crypto. Additionally, businesses wouldn’t accept gold and silver as payment if it were illegal to do so.
As for bartering, it’s unlikely that any properly licensed shop responsible for paying its taxes would accept barter in exchange for goods. Even if you found a farmer who was willing to accept barter for food, he probably wouldn’t need your barter goods month after month. Similarly, a shop that accepted barter the first month would need government crypto to replenish their inventory and pay rent, taxes, and salaries. So it’s unlikely that they’d be willing to trade with you.
Government cryptocurrency or CBDC would give governments complete control over the economy and people’s lives without any clear benefits for private citizens.
This article was originally published in the Epoch Times on 2/27/2023
