- Former CFTC chair Chris Giancarlo has urged U.S. CBDC developers to use the concept as a force for good, not evil
- Giancarlo warned that surveillance could increase through a CBDC, as could punishments for transgressions
- He called for the government to use a digital dollar to reaffirm America’s constitutional rights
The former chair of the Commodity Futures Trading Commission (CFTC), Chris Giancarlo, has said that CBDCs present a chance for the U.S. to “rebalance” its financial principles to avoid turning into a surveillance state like China. Citing the advent of “freedom coins”, as he terms a U.S. CBDC, Giancarlo says that countries “antagonistic to personal freedom, such as China”, will use their sovereign digital currencies to increase surveillance on citizens, something that the U.S. must not do.
Giancarlo Lays Out CBDC Pros and Cons
Giancarlo made his comments in a post for The Hill, where he states from the outset that a U.S. CBDC must “affirmatively protect democratic values like freedom of speech and the right to privacy and lay the foundation for a freedom coin model of CBDC”, and lays out the pros and cons of a digital dollar. As far as the pros are concerned, Giancarlo says that “programmable, instantaneous round-the-clock payments” can be made at a much lower cost than today, with “greater access to financial services, for both retail and wholesale participants” another plus.
He also argues that a digital dollar would “strengthen the ability of central banks to implement monetary policy, allowing direct infusions of money across the economy and vastly improving the administration of benefits and economy-boosting payments”, comparing this to the expense and effort of sending out the stimulus checks that were issued during the COVID-19 pandemic.
“Daunting” Costs Shouldn’t Dissuade Government
However, Giancarlo also notes that there are “daunting” costs to a CBDC, such as the idea of trusting one’s personal information to a public blockchain, although he argues that developments such as zero knowledge proofs could take care of this issue.
Giancarlo’s big concern however is that the U.S. uses its CBDC as a force for good, not evil, and he stresses that it “must not become a new, easier avenue for government agencies to surveil citizens, levy fines and enact punishments as can be expected from autocratic governments using surveillance coins.” Instead, he argues that CBDCs offer the opportunity to “reassess contemporary financial surveillance activities in their entirety and possibly rebalance them in accordance with American constitutional norms, the presumption of innocence and the rule of law.”
Giancarlo’s concerns have already been raised by other privacy groups, who worry that a CBDC will inevitably lead to more tracking of citizens as is already evident in China.