CBDCs With a Focus on Privacy Deceptive Appearances

Recent efforts have been made to propose privacy-focused central bank digital currencies (CBDCs). Proponents argue that CBDCs can be designed to protect privacy and propose a “CBDC bill of rights” to ensure this. However, it is unlikely that these arguments are valid. The United States government has a track record of undermining financial privacy, making it difficult to trust them to establish a “CBDC bill of rights”. An example from history, involving Edward Snowden and the NSA, illustrates how well-intentioned privacy proposals can quickly change. It is likely that even a well-designed privacy-minded CBDC could become something very different. Central bankers and other experts have openly stated that anonymity and complete privacy would not be available with a CBDC. Given these risks and few benefits, the path of CBDCs is likely better left untraveled. They are ill-suited for financial inclusion, unlikely to advance monetary policy, and unhelpful for maintaining the dollar’s world reserve currency status. Governments and organizations pushing CBDCs likely have incentives to encourage adoption for profit. Therefore, proposals for a “privacy-minded CBDC” are unlikely to fulfill their promises. This excerpt is slightly modified from Nicholas Anthony’s new book, “Digital Currency or Digital Control? Decoding CBDC and the Future of Money.” Nicholas Anthony is a policy analyst at the Cato Institute’s Center for Monetary and Financial Alternatives. He is the author of The Infrastructure Investment and Jobs Act’s Attack on Crypto: Questioning the Rationale for the Cryptocurrency Provisions and The Right to Financial Privacy: Crafting a Better Framework for Financial Privacy in the Digital Age. This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.