Opinion | Skepticism of Digital Currency Needs to Be Taken Seriously (2024)

The world’s central banks are moving briskly, and it would seem inexorably, toward introducing digital forms of cash. But I think they are underestimating the backlash from people who worry that digital currencies issued by central banks will become instruments of government control over their lives.

Figures on both the left and right fear that a digital currency would replace paper money, giving the government a way to track people’s spending and even control it — say, by making it impossible to buy certain things with digital currency. In theory, a digital currency could be programmed to lose value — a form of negative interest — to get people to spend it quickly.

Those concerns have penetrated the public’s thinking deeply enough to surface in the Republican presidential campaign. Central bank digital currencies will allow the government to “prohibit ‘undesirable’ purchases like fuel and ammunition,” Gov. Ron DeSantis of Florida, one of the G.O.P. candidates, contended in July. Vivek Ramaswamy, a rival candidate, has made opposition to central bank digital currencies one of his signature issues.

It’s unsettling that the first large nation to test a central bank digital currency on a wide scale is China, which surveils its own citizens. (Mu Changchun, who leads the digital currency project of the People’s Bank of China, wrote last year that it provides “anonymity for small amounts, traceability for large amounts in accordance with the law” to prevent crime.)

Concerns about Big Brotherism came up last week when I moderated a panel on the “digital euro” that was hosted by the European American Chamber of Commerce New York. The speakers argued that some of the fears are grounded in conspiracy theories. While that’s true in some cases, it feels a little too dismissive.

A surprisingly small portion of the world’s money is government-issued. The money in your checking and savings accounts is an obligation of the bank where you have those accounts, not the government. The only government-issued money that the general public can hold is physical cash and coin. (When you take money out of an A.T.M., you’re converting private money to public money.) The reserves that banks hold to transact with one another are issued by the Federal Reserve, but they’re not available to members of the public.