The International Monetary Fund (IMF) has said that central bank digital currencies (CBDCs) could potentially allow a government to control what people spend their hard-earned cash on.
"A CBDC can allow government agencies and private sector players to program, to create smart contracts, to allow targeted policy functions," Li explained. "For example, welfare payments, for example, consumption coupons, for example, food stamps."
"By programming CBDC, that money can be precisely targeted for what kind of people can own [CBDC] and for what kind of use this money can be utilized, for example for food."
Li, who stepped into the role of deputy managing director at the IMF on Aug. 23, 2021, added that by allowing the government to precisely target what people need, this will enable said government to "improve financial inclusion."
However, his comments were quick to garner a reaction from experts, including Nick Anthony, a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives.
'I Don't See How Americans Would Want This'In a follow-up post on Twitter, Anthony quoted a comment made by Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, writing: "I can see how China is for this. I don't see how Americans would want this."
Anthony also noted that "governments have a historical pattern of misusing these tools," citing Canadian Prime Minister Justin Trudeau's move to freeze the bank accounts of anti-COVID-19 vaccine mandate protesters earlier this year.
That includes the United States, where Washington is currently looking into the possibilities for issuing such a digital currency, with officials citing an array of alleged benefits, such as efficient and low-cost transactions, boosting economic growth, and improved access to the financial system.
However, critics fear CBDCs will increase government control over money that could be used as a tool for financial discrimination while simultaneously tracking purchases, and restricting access to funds, thereby working against decentralization, which is one of the main advantages of adopting cryptocurrencies.
The European Central Bank (ECB) reiterated Powell's remarks at the same Banque de France event on Sept. 27, with ECB President Christine Lagarde stating: "There would not be complete anonymity as there is with … bank notes."
Lagarde did, though, add that "there would be a limited level of disclosure and certainly not at the central bank level."