Reject CBDCs, Embrace the Right to Transact

We are all slowly losing something we barely noticed we had: the right to transact. A couple decades ago, it was inconceivable that an overbearing government would freeze payments as a means of social control. Today, a system of pervasive censorship of transactions is emerging to complement pervasive censorship of speech.

Zelinar XY, aka ZXY, is a writer, software developer and greengrocer. He's the author of "The Right to Transact," available on Amazon. You can follow him on Twitter or email him at zelinarxy [at] proton [dot] me.

States have long used economic censorship or sanction as a means of quashing dissent. So is it much of a surprise governments today would abuse the new affordances of digital technology, which expands the reach of data collection, surveillance and asset seizure? Early last year, for instance, the Canadian government declared a state of emergency and ordered banks to freeze the assets of anti-lockdown protesters.

See also: Who Really Benefits From CBDCs? It's Not the Public | Opinion

Soon, because of the steady creep of payments digitization, governments will be able to carry out such interventions routinely – no need to break the glass and invoke emergency powers or enlist the aid of docile private-sector banks.

Central bank digital currencies (CBDCs), which are in various stages of development across the world, will incorporate the ability to freeze or confiscate funds into money itself. With the kind of programmable money envisioned by CBDC advocates, the state may be able to bar you from using your national currency at all, regardless of what bank or payments provider you choose to do business with. You'll no longer only run the risk that some company will mistreat you.

This may not happen, and indeed several central banks have said that they don’t want complete control over the ways users interface with their money. But the simple fact is that CBDCs open the door to that level of control, and it’s likely that many of the social policy aims behind CBDCs – like improving tax collection and fighting financial crime – would be next to impossible without a complete CBDC takeover.

Commercial banks, who would lose revenues if governments got involved in personal banking, would certainly put up a fuss. But either way, large numbers of people will end up using CBDCs, at least some exclusively, and if central bankers' own words are any guide, users are in for dismal treatment: locked funds and routine surveillance, arbitrary rules built into the currency courtesy of "programmability features" and universal KYC utilizing iris scans and fingerprints.

And code speaks louder than words. Brazil's central bank has released documentation and software related to a pilot CBDC that gives the government the ability to freeze any user's balance, "move" any user's balance to another account or even "pause" the entire currency.

See also: If Money Is Speech, CBDCs Should Be Tools for Freedom | Opinion

The justification for this radical update to the basic nature of money is that Bad People can use money to do Bad Things: tax evasion, money laundering and other unspecified "illicit activities." Fine. But we don't yet call for every single car to be tracked mile-by-mile by some centralized government agency, despite cars' being optimal tools for drug, weapons and human trafficking.

We must reject a program of total surveillance and control over currency in the name of stultifying, totalitarian safety. Central bankers are economists. What qualifies them to interpret and enforce law? What "illicit activity" exactly will they have jurisdiction over? Will they wait for the justice system for instruction before using their god-like bureaucratic powers or simply act?

Will they enforce laws (statutes passed by representatives we can vote out of office) or will they enforce "policies" written down by unaccountable bureaucrats?

We should brace for the worst.

Or, we can recognize and defend the right to transact. It's one we naïvely enjoyed from deepest antiquity into living memory. If our declining institutions want to take away this natural right, let them state their case. It will certainly be incoherent.

Nothing otherwise illegal is somehow rendered lawful by the right for people to transact freely: bad behavior is still policed, but not through arbitrary, centralized control over the means of exchange itself. And of course, we need to pursue the one practical route available to us to counteract the slide into financial panopticon: adopt and use cryptocurrency.

The Canadian government, as sometimes happens, believed its own propaganda when it ordered self-custodied bitcoin wallet developers to freeze their users' funds. That government now understands, as the world is beginning to, that this is impossible: cryptocurrency protects the right to transact.