Tucker Carlson: ‘If the Government Were Ever to Digitize Currency, Your Freedoms Would Evaporate’
The claim that FedNow is not the first step toward a CBDC would be more easily digestible were we not aware of the Biden administration’s steady barrage of hostile broadsides against cryptocurrencies.
Between 2008-22, the Fed partnered with a handful of big banks to print $10…
— Robert F. Kennedy Jr (@RobertKennedyJr) April 10, 2023
In the UK we have an unelected Prime Minister who promotes central bank digital currencies – which we also didn’t vote for. Democracy is just an illusion. #CBDCspic.twitter.com/35cJznF6hb
— James Melville (@JamesMelville) April 11, 2023
A ‘Britcoin’ digital currency is an accident waiting to happen
The introduction of a Central Bank Digital Currency (CBDC) in Britain ‘is more likely than not’, says the Bank of England’s Deputy Governor, Sir Jon Cunliffe. A CBDC, for those unfamiliar with the concept, is a central bank liability, like cash but in a digital form, programmed and managed centrally.
According to Sir Jon, the focus on whether to create a digital pound or Britcoin is not about whether there is a current need, but more about ‘creating new possibilities’.
In fact this ‘new possibility’ has every prospect of becoming a major menace and the sooner that this little Bank of England and Treasury scheme is shut down the better.
Moreover, there is no current need nor is there ever likely to be. As former Bank of England Governor Lord King has pointed out, CBDCs are a solution in search of a problem. ‘CBDCs are about ways of making payments; they are not a new currency. Whether a country needs a CBDC is really about the state of its current payments system,’ he said.
‘There are no [payments system} problems to which a CBDC is the only, or even the most obvious, answer. Our payments system is more efficient than those in most other countries’, he concluded.
The UK payments system is no longer based on paper cheques, but on digital payments that clear more or less instantaneously. As Lord King says: ‘It would be somewhat odd to try to increase competition in this area by creating a state monopoly.’
That is only just one of the threats posed by CBDCs. If the volume of bank deposits fell because people invested more of their funds in a British CBDC then the cost of credit throughout the economy would rise as wholesale funding is more expensive and volatile than bank deposits.
Moreover, at a time when people are nervous enough about banks, a CBDC could turbocharge bank runs by providing a central bank safe haven into which depositors could shift their cash at the push of a button.
There is additionally the security risk from hostile states and criminal hackers to consider. As GCHQ Director Sir Jeremy Fleming commented, a CBDC ‘gives a hostile state the ability to surveil transactions. It gives them the ability … to be able to exercise control over what is conducted on those digital currencies’. The North Koreans would be licking their lips, as would plenty others.
But it is the threat to privacy and the risk of greater government control that many people find most frightening about CBDCs. Every personal transaction involving a CBDC would be recorded, giving the tax authorities, using existing powers, unprecedented access to one’s financial history.
Taxes could also be levied at the point of transaction, as the Bank of England explained in its 2020 paper, which also highlighted that a digital pound could be programmable, enabling transactions to occur only according to certain rules or conditions. That means that the Government could use it to impose rationing, for example of fuel or the supply of other goods that it wished to restrict. Or as various IMF-affiliated luminaries have suggested, it could be used as an element of monetary policy through the imposition of negative interest rates. The possibilities for state intrusion and control are endless.
CBDCs introduced in other countries have been an embarrassing flop. Launched in 2021 and lauded by PwC as the ‘world’s most mature CBDC’ the ‘Sand Dollar’ as the Bahamas CBDC is known, currently makes up 0.0631% of currency in circulation. As an LSE research paper commented, this means that ‘the sand dollar barely registers as a form of currency’. And in a brilliant reminder that a CBDC is really just a public sector IT project, the Eastern Caribbean CBDC went off-line for two months due to a system failure, during which time the few people signed up to it could not access their money.
In Nigeria too, people have almost entirely shunned the CBDCs that were introduced in 2021. Less than 0.5% of Nigerians use them, whereas over 50% use cryptocurrencies of one kind or another. To try and force the use of its CBDC, the E-Naira, the Nigerian Central Bank limited cash withdrawals to $225 per week for individuals and $1,123 for businesses, and withdrew older banknotes from circulation without replacing them with enough new ones. The ensuing riots suggest this was not the wisest of policies.
The Nigerian example illustrates that when CBDCs prove unpopular the inevitable temptation will be to reduce the attractiveness of cash. The Bank of England in its CBDC digital consultation is now stressing that cash remains important, as does privacy. But who trusts politicians and bureaucrats to keep their word?
An inept Bank of England is failing in its core tasks. It has created inflation rather than controlling it. Its low interest rate policy has disrupted the financial sector and undermined economic growth. It needs to stick to the knitting and try and do its basic job properly rather than foist upon us a dangerous and unneeded CBDC scheme.