Congressman Emmer Warns Against a ‘Surveillance-Style CBDC’ – Ledger Insights
On Thursday, Republican Representative Tom Emmer delivered the opening remarks at an event on the risks of central bank digital currencies (CBDCs). Speaking about the dangers of financial control at the Cato Institute, a libertarian think tank, the congressman referred to the digital dollar as “government-controlled, programmable money that can be easily weaponized into a surveillance tool.”
Mr. Emmer began his speech by talking about the potential for blockchain to restore control to the individual. “The next phase of the digital economy, the ownership economy,” he said, “consists of a reliable, immutable mechanism for transferring value in real time over the Internet.” Cryptocurrencies are therefore presented as a tool to shift economic power away from centralized institutions and into the hands of American citizens.
In contrast, the congressman argued that the very nature of CBDCs opposes not only cryptocurrencies in general, but also fundamental American values, such as privacy, individual sovereignty and free markets. He worries that the digital dollar could be used to “stifle politically unpopular activity” and laments that the Biden administration seems “willing to trade Americans’ right to financial privacy for a surveillance-style CBDC.”
In response, the Republican representative recently published a CBDC Privacy Act to “stop the efforts of unelected bureaucrats from issuing a CBDC that robs Americans of their right to financial privacy”. Notably, however, this is not Mr. Emmer’s first such bill. Last year, US lawmakers published several CBDC bills focused on the issue of privacy, with Republicans proposing to ban the issuance of a “direct” CBDC (which most central banks aren’t planning anyway).
Overall, the Federal Reserve has long prioritized privacy among its criteria for a digital dollar. Still, Mr. Emmer highlights that once a CBDC is issued, even if it is privacy-preserving, it could potentially be changed to improve population surveillance if a not-so-benign government took power. Likewise, the central bank may decide to deny access to certain groups, which seems likely in Russia. More generally, the concern is that the government could misuse people’s financial information to stamp out individual liberties. Last year, Canada used anti-money laundering (AML) powers to block Covid protesting truckers from accessing their bank accounts. And that was without CBDC.
But Mr. Emmer may also be concerned with protecting the interests of the crypto public. For example, according to a recent report from CoinDesk, the congressman personally received political donations from FTX executives, along with other Republican (and Democratic) lawmakers. The bankrupt cryptocurrency exchange was heavily involved in GOP election campaigns, with the co-CEO of FTX Digital making more than $24 million in financial contributions. In return, Mr. Emmer appears to have been involved last year in the group of congressmen who tried to stop the Security and Exchange Commission’s investigation into certain crypto firms (including FTX), claiming that the requests violated federal law.
Nevertheless, the debate surrounding the issue of privacy and CBDCs is appropriate. Today, through cash, people have access to a form of money that ensures their anonymity. In a future digital world, that probably won’t be the case.
