CBDC Group Thinking

I keep returning to the Central Bank Digital Currency (CBDC) which routinely forms part panel discussions and Q&A sessions I attend. There are many reasons to give everyone pause for thought on the downside of implementing this ‘innovation’. Innovation doesn’t automatically warrant implementation. Any rollout definitely requires a thorough examination and vetting beforehand especially when it grants absolute power to unelected people and when it puts democratic values at risk.


Indeed, politicians are forming their views and new questions are ensuing:

  • In the UK, the Economic Affairs Committee of the House of Lords, aptly posed a rhetorical question: CBDCs are “a solution in search of a problem.” Their report questions if CBDC’s will actually add any significant value given their associated risks. Do we want a solution in search of a problem embedded in our financial system?

  • Cybersecurity remains an unmanageable risk. Beanstalk, an Ethereum-based stablecoin protocol, lost $182M in crypto assets after a cyber attack. Do we really want financial systems that are susceptible to cybercrime and cyber risks which cannot be solved?

  • The Bank for International Settlements (BIS) claim that CBDCs are a tool for efficiency in payments, that encourage competition and reduce costs. However, they also admit that if “not carefully managed, [cross-border CBDCs] could spur currency substitution, exchange rate volatility and tax avoidance.” Are we certain that we want to subject national currencies to these risks?

  • We keep forgetting that CBDCs, like all the other digital solutions and programs, are exclusively dependent on internet connectivity which is delivered predominantly by internet cables between continents. These undersea conduits, with little protection and monitoring, can be subjected to deliberate attacks. For instance, kilometres of internet cables have reportedly been severed and missing. These events remain under reported; for example, in 2008 or 2022 when 4 kilometres of a surveillance cable in the Baltic sea mysteriously disappeared. War experts identify the 2022 event as a precursor to the Russian invasion of Ukraine and its potential extension of this conflict to the Arctic.

  • Japan appears to have concluded that a referendum (its citizens) should decide the future of CBCD in their country. This might be a trend followed by other countries. In the absence of in-depth and impartial education, the electorate won’t be able to make an informed decision. Educating the electorate may also cover:

  1. what CBDCs really are e.g. their cyber risks, deep surveillance of personal by the government, the lack of suitable legal frameworks to regulate and protect citizens (e.g. Bill of Digital Rights as suggested in the US)

  2. there is absolutely no alternative solution to full dependency on internet connectivity to deliver CBDCs.

Central Banks across the globe are deeply embedded in echo-chambers, where group thinking prevails. According to PwC, 80% of central banks worldwide are considering rolling out a CBDC. I hope that when we have educated the public and vigorously debating CBDC (otherwise referred to as programable money) central banks will have identified the weaknesses of group thinking of people who are not democratic elected to represent and decide on our democracies and rule of law.


In this spirit , I found this article co-authored by the H.M Queen Maxima of the Netherlands who is United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development and Agustin Carstens who is the former governor of the Bank of Mexico and currently the General Manager of the Bank for International Settlements (the international association of all central banks). Mr Carstens seems to have refined his thinking from his comments about “central banks’ absolute control” to focusing his narrative on the benefits of CBDC in financial inclusion. It is unclear if his “absolute control” vision is still on the agenda while his public narrative is now diverting focus from “absolute control” to good intentions of financial inclusion.


Still, we have to remain alert.


The road to hell is paved with good intentions.


The absolute control he is talking about means absolute power, and absolute power corrupts.


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