by Andrew Moran, Activist Post:
Expiry dates and restrictions on “less desirable” purchases are some of the key advantages behind central bank digital currencies (CBDCs), according to an economist at a World Economic Forum (WEF) event.
The WEF hosted the 14th annual Meeting of the New Champions in Tianjin, China, also known as Summer Davos. During one of the 30-minute panel discussions on June 28, Cornell University professor Eswar Prasad explained that the global economy is “at the cusp of physical currency essentially disappearing” and that programmable CBDCs and the technology behind these new forms of money could take the international economic landscape toward a dark path or a better place.
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Prasad contended that one of the “huge potential gains” for the digitization of money is the programmability of CBDC units and attaching expiry dates. Governments can also utilize central bank money to socially engineer society.
“You could have … a potentially better—or some people might say a darker world—where the government decides that units of central bank money can be used to purchase some things, but not other things that it deems less desirable like, say ammunition, or drugs, or pornography, or something of the sort,” he said. “And that is very powerful in terms of the use of a CBDC, and I think also extremely dangerous to central banks.”
The author of “Gaining Currency” and “The Dollar Trap” purported that CBDCs possess unique characteristics and could be employed “as a conduit for economic policies in a very targeted way, or more broadly for social policies.”
“That could really affect the integrity of central bank money and the integrity and independence of central banks,” Prasad stated. “So, there are wonderful notions of things that can be done with digital money, but again I fear the technology could take us to a better place, but equally has the potential to take us to a pretty dark place.”
CBDC Expiry Dates
Integrating expiry dates with CBDCs has already been discussed by various central banks worldwide.
The Bank of Canada (BoC) published a paper in 2021 entitled “Best Before? Expiring Central Bank Digital Currency and Loss Recovery.” The institution weighed the pros and cons of expiration dates, asserting that an expiry date would “automate personal loss recovery.”
“With this feature enabled, digital cash could not be spent after its expiry date. Consumers whose digital cash expired would automatically receive the funds back into their online account without having to file a claim,” the Canadian central bank wrote. “We show that offering the option of personal loss recovery could substantially increase consumer demand for digital cash. However, the length of time to expiry plays a key role. An expiry date that is too soon is inconvenient, but a date too far in the future slows down the reimbursement of lost digital cash.”
China has been exploring expiration dates for the digital yuan, suggesting that it would no longer be usable if not spent in a specific timeframe.
