For most of the criticisms directed towards CBDCs on privacy grounds, the reply is: “trust us.” That’s not very reassuring. From Daniel Lacalle at dlacalle.com:
Many market participants have built long positions on euro-denominated assets, expecting a positive outcome from the German stimulus plan and Rearm Europe projects. However, betting on a stronger euro may be optimistic considering the poor track record of these government plans, the rising fiscal challenges of France and other nations, the elevated debt and enormous unfunded liabilities, as well as the imminent implementation of a central bank digital currency. There are undoubted fiscal and deficit problems in the United States, but the relative position against the euro is undeniably stronger considering all the previously mentioned factors.
The European Central Bank (ECB) has accelerated its plan for a digital euro and recently hired the top global tech companies to create the architecture. However, European banks are rightly concerned, as a central bank digital currency poses significant privacy risks as well as a grave erosion of the capacity of the banking sector to lend and perform adequately.
Central bank digital currencies (CBDCs) can be a dangerous tool for their potential risks to privacy, financial stability, and the concentration of monetary power. In the United States, the Trump administration has issued an executive order banning the use of these instruments, labelling them as “monetary tyranny”.
