Programmable Money and the Conditions Attached

One feature distinguishes a digital currency from the money in a current account more than any other: it can be made programmable. Rules can be attached to the money itself. It can be set to expire on a date, to be spendable only on certain categories of goods, or to be released only when a condition is met.

The uses proposed for this are mostly benign and often practical. A relief payment that must be spent on food rather than withdrawn as cash. A subsidy that expires if unused, to encourage timely spending. A government disbursement that can only go to an approved purpose. In each case the programmability serves a stated end.

The same capability, considered from the side of the person holding the money, is a change in the nature of money itself. Cash, and the balance in an ordinary account, carry no conditions; a pound is a pound and may be spent on anything. Programmable money can carry conditions set by whoever issued or last controlled it. The money becomes, in part, an instrument of the rules attached to it.

For most people this will be invisible most of the time. The relevance for a substantial holder is narrower: in a system that permits conditions on money, it becomes possible, in principle, to apply conditions selectively. Whether a given system allows that, and under what controls, is a design question being decided now in the same committees that are deciding everything else about these currencies.

None of this is a forecast of misuse. Programmable money may never be used in the ways its critics fear, and its benign uses are real. The point is only that the capability is new, it changes what money can do, and the rules governing its use are being written before most people have noticed the capability exists. The work follows how these rules are being drawn, so that what the money can be made to do is understood in advance.