Snowden: Deflationary Fed-Controlled CBDC Will Cause ‘Annihilation’ of Savings

BIS Innovation Hub Develops mCBDC Prototype

Edward Snowden recently took to Twitter to weigh in on the hypothetical central bank digital currency (CBDC) issued by the US Federal Reserve Bank (Fed). In the tweet, Snowden commented on and gave criticisms against CBDCs.

Edward Snowden’s (@Snowden) original post was a link to an article that he published about CBDCs on Oct 9, 2021. In this post, Snowden delivers a comprehensive description of his position and arguments on the state of CBDCs and how they might be implemented by the US Federal government. Importantly, he stated that he is hoping for the article to “specifically to influence the Fed’s much-heralded and still-forthcoming “discussion paper,” a group-authored text on the topic of the costs and benefits of creating a CBDC.”

In the reply which Snowden later responded to @adasound_io (the Twitter handle of the Cardano-based NFT platform for musicians), sharing an excerpt of an opinion piece written by Dr. Prasad which was published in the New York Times in July 2021. In the excerpt, Dr. Prasad presents his arguments, which appear to paint the so-called ‘digital dollar’ in a positive light.

This excerpt claims that if cash were to be replaced by this new digital dollar, “the Fed could impose a negative interest rate by gradually shrinking the electronic balances in everyone’s digital currency accounts, creating an incentive for consumers to spend and companies to invest.”

Criticisms of a Fed-controlled CBDC

Snowden retweeted the reply posted by @adasount_io in another post of his own that was published on Oct 9, 2021. He originally made it clear that he does not consider CBDCs to be akin to a ‘digital dollar’ due to the inherent differences between the operating processes and mechanisms of control associated with the former.

Despite this, Snowden admits that the hypothetical fed-controlled CBDC and the ‘digital dollar’ are the same, with the latter being something of a wolf in sheep’s clothing. In the tweet, he continues to provide a personal definition of CBDCs. In light of the deflationary supply of these CBDCs described in the excerpt attributed to Dr.Prasad, Snowden refers to the CBDCs as a “‘useful policy tool’ for casually annihilating the savings of every wage-worker in the country if they don’t spend them fast enough.”

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