Maria Irene
As technology advances, so do the methods that central banks and governments use to exert control over their citizens. One such example is the Federal Reserve’s upcoming payment system, FedNow. While FedNow is not technically a central bank digital currency (CBDC), it carries many of the same risks and raises concerns about privacy and central bank digital control.
In a recent tweet by Balaji Srinivasan, he clarifies the distinction between FedNow and CBDCs while emphasizing the potential threat that FedNow poses to civil liberties. He argues that FedNow is a highly centralizing instant payment system that will grant the Federal Reserve even greater control over individuals’ bank accounts. This is because every payment made through FedNow will go through a Fed-controlled server and must comply with “applicable controls.”
Not only does the roadmap for FedNow involve person-to-person (P2P) payments, but it also plans to support consumer-to-government and government-to-consumer transactions. This would allow for automatic debiting from personal accounts and automatic stimulus payments, thereby providing the government with direct control over citizens’ finances.
Srinivasan points out that the Federal Reserve, which has been criticized for its monetary policies and the consequences they have had on the economy, will now have the ability to directly access and manipulate individuals’ bank accounts. Although FedNow lacks the blockchain component that would make it a CBDC, it represents the fears that many have regarding CBDCs – increased central bank digital control.
While acknowledging the technical differences between FedNow and CBDCs, Srinivasan emphasizes that these distinctions are less important from a civil liberties standpoint. He likens FedNow to a virus that has evolved to avoid detection by changing its appearance without altering its function. As a result, people may not be as cautious of FedNow as they are of CBDCs, even though both represent increased central bank digital control.
The crux of the issue lies in the potential for FedNow to expand the Federal Reserve’s control over individuals’ lives. Srinivasan contends that FedNow does, in fact, increase central bank digital control, even if it is not a CBDC in the strictest sense. This distinction is important, as many people may not be aware of the potential dangers posed by FedNow and other similar systems.
Srinivasan’s call to action is clear: any legislation that seeks to ban CBDCs should also address central bank digital control in the form of FedNow. As technology continues to evolve, it is essential for citizens and lawmakers to remain vigilant about the potential risks and threats posed by new financial systems. By understanding the true nature of systems like FedNow, we can work together to protect civil liberties and maintain a balance between innovation and privacy.
FedNow may not technically be a central bank digital currency, but its implications for central bank digital control should not be underestimated. As governments and central banks continue to explore digital currencies and payment systems, it is crucial to ensure that these technologies do not compromise the civil liberties and privacy of citizens. Addressing the potential dangers of both CBDCs and systems like FedNow will be essential in maintaining the delicate balance between financial innovation and personal freedom.
