In recent years, the idea of Central Bank Digital Currencies (CBDCs) has captured the attention of governments and central banks around the world. CBDCs are digital forms of national currencies, issued and regulated by a country’s central bank. Proponents argue they offer a more efficient, secure, and – trigger warning - ‘inclusive’ financial system. However, a deeper analysis shows that CBDCs pose profound and complex dangers, not least to the freedom of the individual and his property. From enabling unprecedented levels of state surveillance and control to introducing economic instability and undermining financial freedom, the risks posed by CBDCs far outweighs their purported benefits, a case I make below. Let me know what you think in the comments please.
CBDCs pose myriad perils, especially their implications for individual liberty, while also critically posing economic, technological, and even geopolitical risks. The most alarming danger they pose lies in their capacity to dramatically extend the power of the already over-mighty state over its citizens. Unlike decentralised cryptocurrencies such as Bitcoin, which operate on distributed ledgers and resist centralised control, CBDCs are issued and managed by central authorities. This centralisation is not merely a technical detail; it fundamentally alters the relationship between individuals and the state.
CBDCs can provide governments with detailed insight into every transaction made by an individual. Unlike physical cash, which allows for private and anonymous exchange, CBDCs can, and no doubt will, be designed to record every detail of a transaction — the sender, receiver, amount, time, and location. With this data, governments can construct comprehensive profiles of every individual’s behaviour, preferences, associations, and even political leanings.
This level of surveillance, already oppressive, would be unprecedented. While banks and credit card companies already collect some transaction data, CBDCs would centralize all this information into one state-controlled repository, setting a dangerous precedent for privacy erosion and inviting abuse, particularly by the authoritarian and illiberal regimes now prevalent in the West.
CBDCs can be made “programmable,” meaning the issuer can control how and where the money is spent. This feature raises chilling possibilities. For example, a government could restrict CBDC usage for certain categories such as alcohol, fuel, travel, or donations to political groups, enforce expiry dates to compel spending, or freeze funds belonging to dissidents, protesters, or individuals flagged as threats — all without due process.
Such control mechanisms would transform money from a neutral medium of exchange into a tool of social engineering and political compliance and conformity. Even in the few democratic societies remaining, the temptation to use programmable CBDCs to “nudge” behaviour according to state policy would be significant and probably irresistible. The result would be a financial system that punishes nonconformity and incentivises obedience.
Beyond surveillance, CBDCs pose a threat to financial freedom and the autonomy of individuals to manage their wealth free from centralized oversight. A fully implemented CBDC regime would likely coincide with the phasing out of physical cash, often justified under the banners of efficiency or combating illicit finance. But cash is more than a transaction tool; it is a last bastion of financial privacy and autonomy. Without it, every economic interaction is traceable, reversible, and subject to permission from the state.
The end of cash would also destroy the ability of individuals to store wealth outside of the formal banking system. In times of economic or political crisis, citizens often resort to cash as a hedge against institutional failure or abuse. Removing this option strips individuals of their financial sovereignty.
CBDCs would also allow central banks to implement negative interest rates more effectively, essentially penalising savers for holding money. Unlike physical cash, which can be stored outside the banking system and thus immune to such policies, CBDCs could be designed so that balances automatically decrease over time. This would discourage saving and force citizens into constant consumption or investment in state-sanctioned assets thus severely limiting an individual’s ability to preserve wealth independently and imposing top-down macroeconomic policy choices onto citizens without their consent.
Even setting aside the ideological and political concerns, CBDCs carry significant systemic and technological risks that could destabilise economies and financial systems.
One major concern is that CBDCs could ‘disintermediate’ – cut out - commercial banks. If individuals are allowed to hold accounts directly with central banks, they may choose to transfer funds away from private banks, especially in times of financial uncertainty. This could precipitate bank runs on an unprecedented scale, even in the absence of an actual crisis. Granted, our banks are not exactly loved, but does anyone think an almighty state bank with a total monopoly would be friendlier to its customers?
The resulting destabilisation could reduce credit availability, disrupt investment, and increase systemic risk — ultimately undermining the very financial stability that central banks are tasked with preserving.
The centralisation of a nation’s digital currency infrastructure is likely to make it an irresistible target for cyberattacks. A successful breach could compromise the entire monetary system, resulting in massive financial loss, national security implications, and a catastrophic loss of public trust.
Moreover, any technical failure — whether due to a bug, sabotage or the power cuts all too likely in the future because of idiot politicians and their lunatic net zero — could paralyse economic activity. Unlike decentralised systems, which are resilient due to redundancy, a centrally managed CBDC system would represent a single point of failure. If it goes down, total chaos, possibly starvation.
Contrary to claims of promoting financial inclusion, CBDCs could, in practice, exacerbate inequality and exclude the most vulnerable. CBDCs require digital infrastructure, such as smartphones, reliable internet access, and a degree of digital literacy. Many individuals — especially the elderly, rural populations, or the plain thick — may lack these things and as a result, the very groups that CBDCs purport to help could be left behind or forced into dependence on intermediaries.
Informal cash-based economies, official and otherwise, serve as lifelines for millions around the world. Moving to a CBDC-dominated system could dismantle these networks, displace livelihoods, and disrupt communities without providing viable alternatives.
CBDCs do not exist in a geopolitical vacuum. The global proliferation of state-controlled digital currencies could have destabilising international consequences. CBDCs could be used by powerful nations to exert extraterritorial control – something the CIA is already heavily invested in. For instance, a dominant CBDC (like a digital dollar or yuan) could be programmed to comply with sanctions or other political mandates, effectively extending the reach of one country’s policy into another’s sovereign affairs, which could provoke retaliation, balkanise global finance, and ignite new forms of economic warfare.
CBDCs could exacerbate existing tensions over currency dominance. Countries may rush to deploy their own digital currencies to avoid being left behind, leading to a chaotic ‘arms’ race. In the absence of international norms or interoperability protocols, this competition could fragment global trade and financial cooperation.
Advocates for CBDCs often point to benefits such as faster transactions, reduced costs, and improved monetary policy transmission. However, these benefits are either overstated or achievable through existing technologies and reforms. Digital payment systems such as PayPal already offer fast and efficient transactions. Cryptocurrencies provide innovation without centralised control. Financial inclusion can be addressed through regulatory reform, mobile banking, and fintech solutions. The need for CBDCs, therefore, is not born of technical necessity but political ambition. And if we have learned anything over the last two centuries, it should be that we can never trust politicians, especially ambitious ones with a strong ideology.
While CBDCs may streamline certain processes, they also introduce new bureaucracies, compliance burdens, and governance challenges. The cost of creating, maintaining, and securing a CBDC infrastructure is enormous. This effort would be better spent improving existing systems and addressing structural inefficiencies in current monetary regimes.
Central Bank Digital Currencies represent one of the most profound transformations in the history of money. Yet the glossy promises of innovation, inclusion, and efficiency mask a sinister reality: CBDCs are instruments of control, surveillance, and centralisation. They threaten the very foundations of financial freedom, introduce systemic economic risks, and open the door to even worse authoritarian governance.
The adoption of CBDCs must not be approached as an inevitable step forward. Rather, it should provoke widespread debate, rigorous scrutiny, and active resistance from civil society. We must not surrender freedoms in the spurious name of progress.
CBDCs may be digital in form, but their dangers are all too real. To safeguard liberty, privacy, and economic justice in the 21st century, we must treat CBDCs not as a solution, but as a threat to be vigilantly and robustly opposed.