Although some members of Congress suggest that CBDCs are largely theoretical, that couldn’t be further from the truth. According to the Human Rights Foundation’s CBDC Tracker, 11 countries and the Eastern Caribbean Currency Union have launched CBDCs; 39 countries, the Eurozone, and Hong Kong have CBDC pilot programs; and 68 countries, the Economic and Monetary Community of Central Africa, and Macao are researching CBDCs.
Put differently, there are over 1.5 billion people living in countries where CBDCs have been rolled out. Yet the public has largely been left out of this conversation. Most people still have no idea what a CBDC is—let alone whether their government is pursuing one.
Getting this information into the hands of the public and helping people understand what is at stake is why I wrote my book: Digital Currency or Digital Control? Decoding CBDC and the Future of Money. The book breaks down what a CBDC is, why advocates argue that governments need to launch CBDCs, and why the risks make CBDCs something to avoid.
To take one example from the book, advocates often argue that a CBDC could bank the unbanked. The problem? When surveyed, unbanked Americans often say they do not have a bank account because they do not trust the banking system and want to preserve their privacy. Considering that trust in the government is at historic lows and financial surveillance is mandated by law, a CBDC is unlikely to be a solution for these people.
In practice, this lack of interest is exactly what we have seen in countries where CBDCs have been launched. From the Caribbean nations to China, governments that have launched CBDCs are struggling to get anyone to use them on a day-to-day basis. These governments have tried to spur use through giveaways, discounts, and loyalty programs. Yet the public generally recognizes that their needs are being met by existing options like mobile banking, payment apps, and cash.
Other governments, however, have tried a more forceful approach. The Nigerian government caused a cash shortage when less than 0.5% of Nigerians were using its CBDC to get more citizens to use it. The Bahamian government will soon force commercial banks to distribute its CBDC. And most recently, the Thai government launched a quasi-CBDC through a digital wallet that restricts payments to government-approved goods at certain stores within the district listed on each person’s ID card.
With these experiences in mind, it seems there are two major trends appearing. In the best case, CBDCs are a waste of taxpayer resources. They do not offer any unique benefits that are not already provided by the market, so people are hesitant to make the switch, and the technology sits unused. In the worst case, however, CBDCs could threaten financial privacy, individual freedom, and markets—issues that have already begun to surface, even though CBDCs are a relatively recent development.
Central bankers and other policymakers may argue that CBDCs are the future of money, but whether the end result is a waste of resources or a threat to fundamental freedoms, this future is not one that should be welcomed. Considering all signs currently seem to suggest that governments will push forward with CBDCs, it is up to the people to get involved in the conversation before the decision is made for them.
