CBDCs: Financial Liberation or Political Tyranny?
FedNow Launches in July with Implications for Privacy and Personal Autonomy
The Federal Reserve has announced the introduction of its "FedNow" Central Bank Digital Currency (CBDC) in July. While the initial rollout will be limited to interbank transactions, the eventual widespread adoption of CBDCs poses a risk to privacy and personal financial autonomy. CBDCs could allow governments to surveil all financial transactions, enforce dollar limits on transactions, and freeze assets or limit spending based on compliance with arbitrary government mandates.
In contrast, the launch of FedNow aims to improve the efficiency and speed of consumer transactions. It will allow for rapid bill payments, money transfers, and other activities at a lower cost. Program advocates say it will get money out to people much more quickly than the current system. The system will offer participants seven-day, 24-hour access, as opposed to a system that closes on weekends.
As for the implications for precious metals, the widespread adoption of CBDCs could pose a risk to the value of traditional currencies and increase demand for alternative stores of value like gold and silver. However, the launch of FedNow is unlikely to have an immediate impact on precious metal prices.
The launch of the Federal Reserve's FedNow instant payment system in July 2023 has also been met with concern by the title insurance industry in the US. While the system offers users the ability to send and receive payments up to $500,000 24 hours a day, 365 days a year, it also offers the potential for fraud. One of the industry's concerns is that the speed of instant payments makes fund recovery more difficult, leading to a greater chance of wire fraud attempts succeeding. In 2022, CertifID identified $1.4bn in suspected wire fraud attempts, a 145% YoY increase in such cases. With FedNow's instant payment system, industry professionals are concerned that it may be difficult to claw back payments after fraud attempts.
Democratic hopeful Robert F. Kennedy Jr. had this to say:
Kennedy's Tweet expresses concern over the introduction of the Federal Reserve's Central Bank Digital Currency (CBDC), known as "FedNow," which is set to launch in July. Kennedy believes that CBDCs have the potential to lead to financial slavery and political tyranny because they will allow the government to surveil all private financial affairs. He argues that a CBDC tied to digital ID and social credit score will enable the government to freeze assets or limit spending for non-compliance with arbitrary rules, such as vaccine mandates. Kennedy fears that the launch of the CBDC is the first step in banning and seizing Bitcoin, as the Treasury did with gold in 1933. He suggests that governments may use Covid-19 and the banking crisis to promote CBDCs as a safe haven from germ-laden paper currencies or as protection against bank runs. Kennedy's tweet reflects concerns about the implications of CBDCs for individual financial privacy and government control over the economy.
Given the potential risks associated with the introduction of CBDCs and the potential impact on financial privacy and personal freedoms, it may be a wise decision for investors to consider diversifying their portfolios with precious metals. Precious metals have historically been a safe haven asset in times of economic uncertainty and political turmoil, and may offer protection against the potential risks of CBDCs. Consider precious metals ownership as a potential addition to your portfolio today.
