Arun Kumar Shrivastav
Tulsi Gabbard, a former presidential candidate and political commentator, has come out against the United States’ plans to develop a Central Bank Digital Currency (CBDC). She argues that CBDCs will be used as tools of mass financial surveillance, which undermines freedom and autonomy. Gabbard stated in a tweet that the government has already begun to implement its CBDC project, which will lead to a cashless society where every transaction is tracked, monitored, and controlled. She believes that a digital cashless society poses a threat to freedom and autonomy and has called on people to reject this move.
CBDC is a new form of digital money issued directly by a central bank to retail customers, providing a more secure and efficient means of payment and remittance. The US, among other countries, is exploring the potential issuance of a CBDC. However, House and Senate Republicans have consistently opposed CBDCs for their potential to eliminate cash and strip consumers of their privacy. Gabbard echoed this view, stating that CBDCs are about government-sanctioned surveillance and control.
Federal Reserve Chairman Jerome Powell has said that a CBDC, if implemented, would protect transaction privacy but still verify the identities of its users. Gabbard believes that the Federal Reserve’s new FedNow service is the first step toward a CBDC. However, the central bank has clarified that FedNow is not related to digital currency nor aimed at replacing cash.
As of March 1, 2023, over 65 countries are in the advanced stages of developing central bank digital currencies (CBDCs), and over 20 central banks have launched their pilots, with countries like Brazil, Japan, and Russia being among them.
According to insiders familiar with the matter, architects of India’s retail central bank digital currency (CBDC-R) are working to expand the user base of the digital rupee to one million users and are prioritizing the creation of an offline version. While RBI officials publicly stated in March that they aimed to have 500,000 users by July, they are privately looking to double that number. One insider stated that, “Given India’s population as the world’s largest, we expect to reach the milestone of one million users easily,” and that the tentative timeline for reaching one million users is three months.
The Reserve Bank of India (RBI) is conducting both retail and wholesale CBDC pilots, with the retail CBDC pilot active in at least 15 cities and involving more than 13 banks. Since its launch on December 1, 2022, India’s retail CBDC pilot has seen more than 100,000 customers participate in the four months since. With over 50 proposals received by the closing date of March 24 to address the issue of offline transactions, the plan is to be launched by the end of the year.
China has been at the forefront of central bank digital currency (CBDC) development, with its digital yuan already in the advanced pilot stage. The People’s Bank of China (PBOC) is testing the digital currency in several cities and has plans to expand the pilot to the entire country. The PBOC has stated that the digital yuan is not intended to replace cash, but rather to complement it.
China’s government has also expressed interest in using the digital currency to improve financial inclusion and increase the efficiency of cross-border payments. However, concerns have been raised about the potential for increased state surveillance and control over financial transactions.
Despite their initial plans of launching the eNaira in September 2021, the digital currency has faced rejection from the Nigerian people.
According to an article on CoinDesk, they fear the potential for government overreach and surveillance. Despite the central bank’s efforts to promote financial inclusion and modernize the economy, the lack of public trust in the government’s handling of sensitive information has proven to be a significant hurdle.
The Bank of Japan announced that it plans to begin testing its central bank digital currency (CBDC) in April 2023, with a goal of testing basic functions such as issuance, distribution and redemption. This will be the first phase of testing, with a second phase planned for the fiscal year starting in April 2024.
The pilot program is part of the bank’s broader efforts to explore the feasibility of a CBDC and prepare for any future developments in digital currencies.
Japan joins a growing list of countries testing or launching CBDCs, including China, the United States, and the European Union. Our Reserve Bank of India has to closely monitor the developments in the western countries and the nature of concerns expressed in the countries with functioning parliamentary democracy. RBI’s CBDC has to be foolproof so that the interests of the consumers as also the issue of privacy are kept in mind. (IPA)
