Women’s consumer spending drives the US economy. We account for 85% of all household spending. Research also shows women either control or influence major spending decisions in the family. So it follows that, as the most active “spenders”, women will be disproportionately affected by a government roll- out of a Central Bank Digital Currency. 

A what?

Exactly. 

My guess is 90% of women don’t know what a CBDC is. Let’s fix that, starting now. 

This isn’t a technical overview. This post explains CBDCs in terms of what they can and can’t do, depending upon who controls them. 

A Central Bank Digital Currency (CBDC) is government-issued and regulated cryptocurrency - digital money that could change how countries handle finances globally. A US CBDC would be designed and issued by the Federal Reserve. Unlike cryptocurrencies such as Bitcoin or stablecoins like USDC, CBDCs are centralized and backed by the government. 

While only 3 countries have launched CBDCs, all the major economies of the world are testing them. The Atlantic Council tracks 134 countries developing CBDCs. 

Proponents of CBDCs point to these potential benefits:
- Improving financial inclusion.

- Providing an efficient digital payment option for everyone, no matter where they live.

- Boosting economic growth and stability while reducing the informal economy.

- Modernizing payment systems and improving financial access.

- Lowering the costs of managing cash.

- Making cross-border transactions more efficient.

The US has an advanced economy. We have high rates of financial inclusion and less of a “shadow” economy than most developing countries.  Even so, proponents of the U.S. CBDC say it could bring improvements to payments systems, foster inclusivity. 

A US CBDC would also be a competitive alternative to “stablecoins”, which are cryptocurrencies tied to the US dollar, but issued by private companies. Perhaps most importantly for policy makers, a US CBDC could strengthen the dollar’s position as competition increasingly challenges the USD status as the world’s reserve currency. 

Objections to CBDCs

While CBDCs offer some benefits, they also face significant objections and concerns. Critics argue that CBDCs introduce risks to privacy, data protection to financial stability of existing systems. 

The bottom line is that if governments could have designed monetary systems without cash, they would have done so. Why? 

Cash is anonymous and hard to trace. 

The biggest benefit to governments of a CBDC is, if they choose to do so, the central bank can replace cash completely with programmable, trackable “money” that enables the government to monitor spending at the level of individual citizens. 

Alex Gladstein is the Chief Strategy Officer for the Human Rights Foundation. He wrote the book “Check Your Financial Privilege”, a meticulous overview of how governments large and small undermine the savings and financial well-being of their citizenry. He also details how everyday citizens are using Bitcoin as a safety net.

Alex doesn’t mince words when it comes to the risks of CBDCs. Rather than seeing them as the path to financial inclusion, Alex writes:

“CBDCs aim to replace paper money with electronic credits that can be easily surveilled, confiscated, auto-taxed and debased via negative interest rates. They pave the way for social engineering, pinpoint censorship and de-platforming, and expiration dates on money.”

Source: Check Your Financial Privilege, Chapter 2, Section: Confidential Transactions, Page 40-41

Below is more detail about key objections to CBDCs, drawing on views from the Cato Institute and financial blogger Lyn Alden’s thoughts in her essay “What is Money?”  (By the way, Lyn is the best financial blogger I have found for intelligence, research integrity and ability to write clearly so everyone can understand.)

Financial Privacy Concerns: One major worry is that CBDCs could reduce privacy. Unlike cash, digital transactions can be easily tracked. Governments could gain unprecedented access to personal financial data, raising fears of misuse. For instance, CBDCs could be programmed with restrictions, limiting how money can be spent, which could be misused to control behavior.

Financial Inclusion as Tax Enforcement: CBDCs could help tax authorities track income and detect tax evasion. However, simply introducing a CBDC won’t fix deeper issues without broader reforms. In countries with corrupt or inefficient governments, people might resist using CBDCs if they don’t trust that increased tax revenue will benefit society.

Government Control and Surveillance: CBDCs could increase government power, potentially leading to misuse. Authorities might use CBDCs to enforce capital controls or limit access to funds for political reasons, which could erode trust in the financial system.

Back to CBDCs and Women

Women wield the majority of purchasing power. Men still dominate the financial system. It’s important that women have a say in the development, design, and potential roll-out of a CBDC. For example, if cash is eliminated from the economy, the government can trace and control anyone’s spending on anything. For women, that includes reproductive products and services. 

That brings us to the next cautionary tale, using Texas’ anti-abortion legislation as an example. You can read more here.

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