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Home > Penn Carey Law Journals > U. Pa. J. Int'l L. > Vol. 46 (2024-2025) > Iss. 3 (2025)

 

University of Pennsylvania Journal of International Law

Publication Date

Spring 2025

First Page

759

Document Type

Comment

Abstract

The article explores the legitimacy of programmable money and the role of law in guaranteeing its legitimacy. Programmable money, with built-in payment conditions, provides a useful tool for implementing government programs such as social security and pandemic relief. The problem is that this programmable design feature may interfere with payment autonomy, especially if the programmable functions are placed into central bank digital currency (“CBDC”) which is legal tender. Such legitimacy concern is essentially a struggle between public and private powers in the mobilization of resources within a society. In pursuit of financial democracy and market freedom, the expansion of central bank power with digital money should be restricted. This is consistent with the idea that the creation of CBDC is largely for welfare state purposes rather than regulatory functions.

To confirm this social political understanding, law is needed to define the programmable functions of CBDC. This will help maximize the benefits of governance efficacy while minimizing payment interference to be proportionate with the societal benefit. The law is critical in the construction of CBDC to promote inclusion, freedom, public interest, and social welfare. Specifically, the law should provide explicit rules for the sourcing, distribution, and use of programmable money to fund government initiatives. Permissible programmable functions include social security and emergency financial support, whereas prudential regulation measures and unconventional monetary policy instruments require further analysis. Transparency is critical in the design and operation of programmable money because it allows the public to observe the function and target of each sum, check its effects, and make informed decisions on CBDC holding strategies.

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