The Biggest Risks Associated With Central Banks’ Digital Currencies (CBDCs)
There has been much buzz around central bank digital currencies (CBDCs) recently, with the idea raising some questions and many concerns.
According to some, this concept is a potential solution to the problems faced by traditional fiat currencies.
However, CBDCs have another side often overlooked by many – their potential to allow mass surveillance. This article will examine the risks of these currencies and why they could be a tool for governments to track and monitor their citizens.
What are central bank digital currencies (CBDCs)?
Central banks issue and support these digital versions of traditional fiat currencies. They are intended to be used as a medium of exchange and store of value, similar to cash. CBDCs differ from cryptocurrencies like Bitcoin as they are centralized and backed by a central authority.
What are the risks associated with these central bank digital currencies?
One of the main risks is that central bank digital currencies could allow governments to track and control their citizens in ways that are not currently possible with traditional fiat currencies.
Because they are digital, they can be easily tracked. As a result, the government can monitor every transaction made with CBDC.
Additionally, they can be used to introduce negative interest rates, which would require citizens to pay the central bank to hold their money. This could increase government control over citizens’ financial decisions excessively. In addition, it could put pressure on small businesses.
But how exactly can they be used for mass surveillance or population control?
There are several ways in which CBDC can be used for this purpose:
- First, they can be used to track and monitor financial transactions in real-time. This would give governments unprecedented insight into the financial lives of their citizens.
- Second, CBDCs could be used to introduce “know your customer” (KYC) requirements requiring users to provide personal information to operate the currency. This information could be stored in a central database and used for tracking and monitoring purposes.
- Finally, CBDC can be used to place restrictions on certain goods or services, such as censoring the ability to purchase certain types of content or restricting access to specific websites.
Overall, it is essential to carefully consider the potential implications of CBDC, including the risks to personal liberty and financial stability, before adopting them.
It is also crucial that individuals know that CBDC could be used in ways limiting their ability to hold and use their own money.