Hungarian Conservative

Digital Currency: Economic Progress or Dictatorship?  

If the 'leader of the free world' is pushing for an economic revolution that could potentially have dystopian consequences, and is not being clear about it, there is reason to raise an eyebrow.

It has been six months since US President Joseph Biden issued Executive Order 14067 titled Ensuring Responsible Development of Digital Assets—an Executive Order does not need the consent or the approval of elected officials. Acknowledging the exponential growth and opportunity that the digital asset ecosystem presents under the rationale of combating global illegal transactions, it outlines a policy interest of a ‘responsible financial innovation’ and the need for evolution and coordination to ensure that the United States continues to be a leader in the field. Subsequently, the order directs the US Federal Reserve to look into the creation of digital currency under the direction of the Treasury Department and other federal agencies, as well as to study the impact of cryptocurrency on financial stability and national security of other agencies. 

While on the surface this seems both appropriate and opportune, there are some points that are unsettling, such as the ones in Section 4 of the Executive Order:

‘Any future dollar payment system should be designed in a way that is consistent with United States priorities and democratic values, including privacy protections, and that ensures the global financial system has appropriate transparency, connectivity, and platform and architecture interoperability or transferability, as appropriate…’Within 180 days of the date of this order, the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies, shall submit to the President a report on the future of money and payment systems, including the conditions that drive broad adoption of digital assets.’

The order also requests the US Federal Reserve to study ‘the optimal form of a United States CBDC [Central Bank Digital Currencies],[1] and to develop a strategic plan for the Federal Reserve and broader United States Government action, as appropriate, that evaluates the necessary steps and requirements for the potential implementation and launch of a United States CBDC.’

The building of a CBDC, which has been hypothetical, may soon become a reality

Under certain cryptocurrency experiments, as with Project Hamilton (PH), the building of a CBDC, which has been hypothetical, may soon become a reality; PH has been working together with the Federal Bank of Boston to achieve this since 2016. The Biden Administration sustains the CBDC is necessary to fight international criminal transactions, while promoting equitable access that would be cost-effective by assuring the critical need for safe, affordable, and accessible financial services.

As of this June, eight Caribbean countries and Nigeria are the only countries that have so far fully launched a CBDC; according to the Atlantic Council (AC), more than one hundred countries, representing 95 per cent of the global GDP, are researching and exploring the possible issuance of CBDCs.

What Does This Mean?

In theory, the world’s reserve currency—the US Dollar (USD)—may go digital, potentially transforming the way Americans, and for that matter, most people in the world transfer and use their money. 

Digital payments per se are nothing new, as they have in fact become a routine affair, ranging from mobile applications like Apple Pay to debit cards, bank transfers, and payment services. What would change is the apparatus through which money is to be transacted across the US financial system. As a result, unlike in the case of online banking, the government would be able to track and record every purchase made by every individual.

The ledger underpinning the currency would likely be exclusively kept by the government, which would potentially give it the ability to monitor transactions, halt them, or confiscate balances.

‘If the government controls the ledger then there is a risk that it will monitor those transactions without going through the proper legal channels because it’s not taking information from someone else,’ said William Luther, fellow with the Bitcoin Policy Institute and associate professor of economics at Florida Atlantic University. ‘It’s just looking at its own information,‘ he added.

According to Jim Rickards, a world-renowned economist and former advisor to the CIA, the White House, and the Pentagon:

‘This is different from ‘online banking’ and it has nothing to do with crypto. Every digital dollar will be a programmable token, like bitcoin or other crypto currencies. Instead if it plays out the way I see it, [the digital USD] will have the full backing of the US Federal Reserve. They will replace the cash fiat dollar we have now, and will soon be the sole, mandatory currency of the United States.’ 

Executive Order 14067, says Rickards, sets the stage for legal government surveillance of all US citizens, total control over everyone’s bank accounts and purchases, and grants the government the ability to potentially silence all dissenting voices for good.

Theoretically, such state of affairs occur solely in totalitarian regimes, like Communist China with its ‘social credit’ sytem, a national surveillance scheme that regulates the behaviour of individuals, businesses, and government institutions. Individuals are ranked in different areas of civil life using data collected from court documents, government, or corporate records, and in some cases, citizen observers. Those with higher scores have an easier time getting bank loans, free medical checkups, and discounts on heating. Those who do not, are given a bad credit score, which could result in a bank account closure, heavy fines and/or imprisonment. 

While some say this can never happen in a democratic society, something to the like happened early this year in Canada. Prime Minister Justin Trudeau, in an effort to stop truckers from protesting against vaccine passports, declared a state emergency and froze the bank accounts of over two hundred demonstrators, in the value of about $7.8 million (USD 6.1 million/€5.892 million). 

What to Expect

In the modern era, security issues have multiplied with the advent of the Internet age and the threat of cyberattacks. In a June report, the AC forwarded that depending on the choice of CBDC design, potential new cybersecurity risks include (but are not limited to) an increased centralisation of payment processing and sensitive user data; reduced regulatory oversight of financial systems; increased difficulty reversing fraudulent or erroneous transactions; challenges in payment credential management and key custody; susceptibility to erroneous or malicious transactions enabled by complex, automated financial applications; and increased reliance on third parties, such as non-banks.

There are also concerns of cyber attacks that could potentially ‘freeze’ a country’s programmable money or that could lead to its theft. Also, belligerent regimes could easily bypass any sanctions imposed on them, as is the case with the Russian Federation.

With the cryptocurrency, Russia is able to continue making its domestic and international payments

In fact, it has been reported that the CBDC system has facilitated Russia getting around US and EU sanctions over its war with Ukraine. With the cryptocurrency, Russia is able to continue making its domestic and international payments despite sanctions that are currently blocking the country from accessing the international banking system. Recent reports from Moscow, which were not independently verified, suggest Russians own more than €200 billion worth of cryptocurrencies. The Central Bank of Russia is working towards the upcoming adoption of a CBDC, with the plan to unveil a digital Ruble in 2024.

There is no question about the possibility of the CBDC bringing about important benefits to the public at large, such as fostering financial inclusion, creating new value-added in the economy, and reducing transaction costs, as well as curtailing criminal transactions across borders. Not to mention the fact that it would help the US-led West stay in competition with its global adversaries. But at what price? At the cost of our individual liberty?

Reich Minister of Propaganda Joseph Goebbels once said:

‘Propaganda must not investigate objective truth, but must present only one aspect of the truth, which is conducive to its purpose.’

Indeed. As indicated, if the ‘leader of the free world’ is pushing for an economic revolution that could potentially have dystopian consequences, and is not being clear about it, there is reason to raise an eyebrow. One thing is certain: individuals and companies that operate in the digital currency milieu, specifically those who depend on or utilise cryptocurrency for any part of their business, should expect a steady increase in interrogations from both US and foreign law enforcement authorities. 

[1] A CBDC is a central bank liability offered in digital form for use by citizens and businesses for their retail payments. It would complement the current offering of cash and wholesale central bank deposits. See ‘CBDC – How Dangerous is Programmability?’, The FineReg Blog, (21 Sept. 2021),, accessed 1 September 2022.

If the 'leader of the free world' is pushing for an economic revolution that could potentially have dystopian consequences, and is not being clear about it, there is reason to raise an eyebrow.