Former CFTC Chair Christopher Giancarlo has called on the US to lead the development of central bank digital currencies (CBDCs) that prioritize privacy and democratic values. Read on to learn more.
The Need for “Freedom Coins”
The former chair of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, has urged the United States to take the lead in developing central bank digital currencies (CBDCs) that prioritize privacy and democratic values. In an op-ed published in The Hill on March 13, Giancarlo argued that the US must influence CBDC development to move away from “surveillance coins” and toward “freedom coins.”
Giancarlo’s call for “freedom coins” comes at a time when many countries around the world are exploring the possibility of developing their own CBDCs. China, in particular, has made significant progress in developing a digital version of its currency, the yuan, and has already conducted several pilot tests.
The Risks of “Surveillance Coins”
Giancarlo believes that the development of CBDCs must take into account the risks of creating “surveillance coins” that could threaten privacy and individual freedoms. He notes that many existing digital payment systems already track and record users’ transaction histories, and CBDCs could exacerbate these concerns.
Furthermore, Giancarlo argues that CBDCs could be used to further the surveillance state by allowing governments to monitor and control the flow of money in their economies. He warns that if CBDCs are designed with these goals in mind, they could be used to suppress political dissent and limit individual freedoms.
The Promise of “Freedom Coins”
Instead of creating “surveillance coins,” Giancarlo advocates for the development of “freedom coins” that prioritize privacy and democratic values. He notes that existing cryptocurrency protocols offer a blueprint for designing CBDCs that can protect users’ privacy while still ensuring the integrity of the financial system.
One way to achieve this, according to Giancarlo, is to adopt a decentralized model for CBDCs. This would allow users to maintain control over their funds and prevent governments or other entities from using CBDCs for surveillance or control.
Giancarlo also suggests incorporating privacy-enhancing technologies like zero-knowledge proofs, which allow users to prove the validity of a transaction without revealing any other information. This would help to prevent the kind of transaction tracking that is common with existing digital payment systems.
The Role of the US in CBDC Development
Giancarlo believes that the United States has a crucial role to play in shaping the development of CBDCs. He notes that the US dollar is still the world’s dominant currency and that the adoption of a CBDC could have significant global implications.
He argues that the US must take a leadership role in CBDC development to ensure that democratic values like freedom of speech and the right to privacy are protected. By prioritizing these values in CBDC design, the US can help to set a standard for other countries to follow.
Conclusion
The development of CBDCs has the potential to transform the way we think about money and financial transactions. However, as Giancarlo notes, it is crucial that CBDCs are designed with privacy and democratic values in mind.
By prioritizing these values, CBDCs can become “freedom coins” that empower individuals and protect their privacy. The US has an important role to play in shaping CBDC development, and it is crucial that we take this responsibility seriously to ensure that CBDCs are designed in a way that reflects our values as a democracy.
