At the IMF-World Bank Annual Meeting on Friday, the IMF’s deputy managing director, and former deputy governor of the People’s Bank of China, Bo Li, said CBDCs would help financial programmability.
“A CBDC can allow government agencies and private sector players to program, to create smart contracts, to allow targeted policy functions,” he explained.
Li explained that a CBDC can be programmed and targeted for a specific use like welfare payments, food stamps, and consumption coupons.
“This potential programmability can help government agencies to precisely target their support to those people that need support,” he continued to explain.
Li also explained how institutions could take advantage of CBDC data by following the model of Chinese Communist Party where “non-traditional data can be very useful for financial service providers to give me a credit score.”
“…In China, because I personally experience it, right. Because those transaction data can be utilized by service providers in credit underwriting in the sense that you know – those transaction data in terms of how many coffee I drink every day where I buy coffee. Do I use Uber every day? And what kind of working hours I have,” Li said.
According to Cato Institute’s Center for Monetary and Financial Alternatives policy analyst, Nick Anthony, Li’s comments mean the government could use a digital currency to “precisely control what people can and cannot spend their money on.” A programmable currency could also allow governments and financial institutions to control who has access to money.
In a paper published earlier this year, Anthony warned that “a CBDC would erase what little financial privacy still exists in the United States.”
If you're tired of censorship and dystopian threats against civil liberties, subscribe to Reclaim The Net.