New Report on CBDCs - A cautionary tale
Detailed summary on what a world solely dependent on Central Bank Digital Currency would mean to you.
Here is a summary of the March 17, 2025 46-page report "Central Bank Digital Currency: What It Is and How It Could Impact Your Privacy, Security, and Autonomy" report, published by the Justice Centre for Constitutional Freedoms (JCCF).
Overview
This report critically examines Central Bank Digital Currencies (CBDCs), which are digital forms of a country’s fiat currency issued and backed by a central bank, such as the Bank of Canada. Unlike decentralized cryptocurrencies like Bitcoin, CBDCs are centrally controlled, raising significant concerns about privacy, autonomy, and economic freedom. From a Canadian perspective, CBDCs pose a serious threat to Charter-protected rights, including freedom of expression (Section 2(b)), security of the person (Section 7), and equality under the law (Section 15) but pose a serious risk to all nationalities (44 countries including all original BRICS member states (Brazil, Russia, India, China, and South Africa) are already in the pilot CBDC phase with millions of users.)
Governments focus on the benefits (mostly to governments) of CBDCs as tools for efficiency and financial inclusion, conveniently glossing over the risks of:
1) Unprecedented government surveillance,
2) Reduction of rights and freedoms,
3) Increased control over individual lives/businesses and
4) Complete dependence of digital systems controlled (and operated by) governments to conduct all financial transactions;
5) Potential for failure - CBDC promoters fail to discuss what happens and the unprecedented financial hardships when systems fail either through technical malfunctions, weather events, disasters, intentional attacks and disruptions orchestrated by criminal organizations, foreign governments and/or terrorist groups.
Summary
1. Executive Summary
CBDCs represent a transformative shift in monetary systems, with profound implications for privacy, security, and autonomy. This report warns that a poorly designed CBDC could erode Canadians’ ability to conduct anonymous transactions, expose them to government surveillance, and restrict economic participation. The report’s key findings: CBDCs are technically feasible but come with significant drawbacks, international rollouts have largely failed to meet expectations, and the loss of cash as a private alternative exacerbates these risks.
2. What Are CBDCs?
CBDCs are digital liabilities of a central bank, distinguishing them from physical cash, private bank deposits, and cryptocurrencies. It outlines two main types:
Retail CBDCs: Available to the general public for everyday use.
Wholesale CBDCs: Restricted to financial institutions for interbank settlements.
The Bank of Canada has been researching a retail CBDC since at least 2017, driven by goals like improving payment efficiency and countering the rise of private cryptocurrencies. However, this report questions the necessity of CBDCs, arguing that existing digital payment systems (e.g., debit cards, Interac) already meet most needs without the risks of centralization.
3. Technical Aspects of CBDCs
Two primary CBDC models are examined:
Account-Based CBDCs: Individuals hold accounts directly with the central bank, requiring identity verification and enabling detailed transaction tracking.
Token-Based CBDCs: Transactions use digital tokens, potentially allowing pseudonymity akin to cash, though central banks could still impose controls.
Both models facilitate surveillance unless explicitly designed with privacy safeguards, which central banks have shown little inclination to prioritize. The report contrasts CBDCs with cash, which offers anonymity and independence from digital infrastructure, and decentralized cryptocurrencies, which resist centralized oversight.
4. International Case Studies
Here is a brief limited overview CBDC implementations worldwide which highlight the practical and ethical challenges:
Nigeria (eNaira): Launched in October 2021, the eNaira aimed to boost financial inclusion but achieved less than 0.5% adoption by 2023 due to public distrust, technical issues, and a preference for cash. A 2023 cash shortage, perceived as a forced push toward the eNaira, sparked protests and legal challenges.
Eastern Caribbean (DCash): Introduced in 2021 by the Eastern Caribbean Central Bank, DCash faced outages (e.g., a two-month disruption in 2022) and low uptake, with merchants and citizens favoring cash and cards.
China (Digital Yuan): Piloted since 2014, China’s CBDC exemplifies authoritarian use, with features like expiration dates on funds and integration into a social credit system. The report cites this as a cautionary tale of how CBDCs can suppress dissent and enforce compliance.
Other Examples: The Bahamas’ Sand Dollar and pilots in Sweden, Australia, and Norway show mixed results, with declining cash use amplifying CBDC risks but not guaranteeing adoption.
These cases underscore technical vulnerabilities, public resistance, and the potential for CBDCs to extend government control, particularly in less democratic regimes (like Canada?).
5. Risks to Rights and Freedoms
Here are some threats to Canadians’ constitutional rights:
Privacy (Section 7): CBDCs could eliminate anonymous transactions, exposing spending habits to government scrutiny. The report references Canada’s 2022 Emergencies Act invocation, when bank accounts were frozen without judicial oversight, as evidence of this risk and the devastating consequences to those targeted. (Despite government and bank assurances about respecting customers’ privacy, the fact that some of Canada’s largest banks seized some customers’ accounts and closed others — even though banks were not subject to penalties or prosecution had they chosen not to comply97 with government requests — illustrates how vulnerable any form of digital banking is to political influence, interference, and control, regardless how privacy-protective the system might be.)
Autonomy (Section 7): Programmable CBDCs (e.g., with expiration dates and spending limits) could restrict personal choices, such as where or how money is spent at the descretion and control of government.
Freedom of Expression (Section 2(b)): Financial surveillance could chill dissent by targeting donations to controversial causes, as seen with the Freedom Convoy.
Equality (Section 15): Rural or low-income Canadians without reliable internet access could be excluded from a cashless CBDC system.
The report argues that these risks are not hypothetical, citing global precedents and Canada’s own history of financial overreach.
6. Economic and Social Implications
The shift to a cashless society, accelerated by CBDCs, raises additional concerns:
Exclusion: Populations without digital access (e.g., 14% of Canadians over 65 lack internet) could lose economic agency.
Surveillance: Private Banks and tech firms might collaborate with governments, amplifying data collection.
Control: Programmable money could enforce policies like carbon taxes or social credit systems, limiting individual freedom.
What happens in the event of major power failures, internet outages, extreme weather events, natural disasters, health crises, civil insurrections and war? Financial transactions would cease to function as would all essential systems dependent on power and connectivity to operate.
The JCCF challenges the Bank of Canada’s claim that CBDCs enhance security and profitability, arguing that these benefits are overstated and ignore privacy trade-offs.
7. Lessons from Cashless Societies
Countries like Sweden, where cash use has plummeted to 8% of transactions, illustrate the risks of dependency on digital systems. Outages, fraud, and exclusion of vulnerable groups (e.g., the elderly) highlight the resilience of cash. The phasing out of cash alongside a CBDC rollout would leave citizens/residents/vistors without a private alternative.
8. Recommendations and Call to Action
The report opposes the inevitable adoption of CBDCs, urging:
Public Awareness: All must understand CBDCs’ implications and demand transparency from Central Banks.
Preservation of Cash: Cash should remain a legal tender option to protect privacy and autonomy.
Legislative Oversight: Any CBDC must include robust privacy protections, subject to parliamentary review.
Key Themes and Arguments
Centralization vs. Liberty: The JCCF portrays CBDCs as a tool of centralized power, contrasting them with the decentralized ethos of cash and cryptocurrencies.
Privacy as a Right: The loss of anonymous transactions is a recurring concern, tied to Canada’s Charter and global human rights norms.
Skepticism of Authority: The report highlights distrust in government and financial institutions, amplified by past overreaches like the Emergencies Act invoked by the Trudeau government in 2022 following the Trucker’s Convoy with devastating effect on those targeted.
Practical Failures: International examples demonstrate that CBDCs often fail to deliver promised benefits, undermining their justification.
Critical Analysis
The report’s strength lies in its detailed synthesis of technical, legal, and international perspectives, making a compelling case for caution. Its use of real-world examples lends credibility to its warnings about surveillance and control.
Conclusion
The "Central Bank Digital Currency" report is a thorough and impassioned critique of CBDCs, rooted in a defense of Canadian constitutional freedoms. It warns that a digital dollar could usher in an era of unprecedented surveillance and control, urging citizens to resist its adoption unless privacy and autonomy are guaranteed. As of March 18, 2025, with the Bank of Canada still in exploratory phases, the report serves as both an educational resource and a rallying cry for public vigilance.
Read/Download the Full Report with references…
Reader question.... and answer.
"Hi Matt, do you know what the US are doing with CBDCs, if anything?"
Michael
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Michael;
Thanks for your question. It was one I had wondered about myself given the significant changes since January 2025 with a new President.
The good news is that in his first month in office, Trump signed an executive order directing federal agencies to halt all ongoing work on a CBDC, effectively making the U.S. the only major country to explicitly ban such efforts at the federal level. So the short answer is that a U.S. CBDC is unlikely to happen, at least in the near term given Trump's preference for StableCoin and supporting the USD "through existing systems and private-sector innovations rather than a government-issued digital currency."
Here are more details that I found with the help of AI....
As of March 19, 2025, the United States has taken a cautious and deliberate approach toward Central Bank Digital Currencies (CBDCs), with no definitive legislation or implementation in place. Unlike many of the 44 countries identified in the JCCF report that are actively advancing CBDC frameworks, the U.S. has prioritized research, debate, and policy exploration over concrete legislative action/issuance.
(The full JCCF report is available at see https://www.jccf.ca/wp-content/uploads/2025/03/CBDC_Final-Report_March-17_Justice-Centre-for-Constitutional-Freedoms.pdf)
The Federal Reserve, the U.S. central bank, has been studying the potential benefits and risks of a CBDC for several years. In January 2022, it released a discussion paper titled "Money and Payments: The U.S. Dollar in the Age of Digital Transformation," which outlined the concept of a CBDC and sought public input without committing to any specific policy outcome. Federal Reserve Chair Jerome Powell has consistently emphasized that the Fed would not proceed with issuing a CBDC without explicit authorization from Congress and support from the executive branch. In testimony before the House Financial Services Committee in March 2023, Powell reiterated that Congressional approval would be necessary, underscoring that the Fed views a CBDC as a significant policy decision rather than a unilateral action it can take.
On the legislative front, there has been notable resistance to CBDCs in the U.S., particularly from Republican lawmakers. In February 2024, Senator Ted Cruz (R-Texas), along with co-sponsors like Senators Bill Hagerty (R-Tenn.) and Rick Scott (R-Fla.), introduced the CBDC Anti-Surveillance State Act. This bill aims to prohibit the Federal Reserve from issuing a CBDC directly to individuals or indirectly through financial institutions, citing concerns over privacy, government surveillance, and financial stability. The legislation has garnered support from groups like Heritage Action for America and the American Bankers Association, reflecting a broader sentiment among some policymakers and stakeholders that a CBDC could undermine individual freedoms and the existing financial system. While this bill advanced through the House Financial Services Committee in September 2023, its prospects in the Democrat-controlled Senate remain uncertain as of early 2025.
Conversely, there have been limited efforts to promote a U.S. CBDC. In September 2023, Representative Stephen Lynch (D-Mass.) reintroduced legislation to encourage the development of a digital dollar, supported by the Congressional Digital Dollar Caucus, which seeks to advance understanding and potential adoption. However, this initiative has not gained significant traction amid broader political polarization on the issue.
A significant shift occurred in January 2025, when President Trump, in his second term, signed an executive order directing federal agencies to halt all ongoing work on a CBDC, effectively making the U.S. the only major country to explicitly ban such efforts at the federal level. This order also revoked prior frameworks, such as Executive Order 14067 from March 2022, which had called for responsible exploration of digital assets. The Trump administration has instead pivoted toward supporting stablecoins—privately issued digital currencies pegged to the dollar—as a means to maintain U.S. financial leadership, with House Financial Services Committee Chairman French Hill (R-Ark.) advocating for a regulatory framework to bolster their adoption.
Despite this federal stance, the Federal Reserve has participated in international CBDC research, such as Project Agorá, a cross-border wholesale CBDC initiative with six other major central banks. However, these efforts remain exploratory and do not signal an intent to issue a retail or widely available CBDC domestically. Fed Chair Powell, whose term extends to spring 2026, has affirmed in early 2025 testimony that he will not pursue a digital dollar during his tenure, aligning with the administration’s position.
In summary, while many countries are advancing CBDC legislation, the U.S. has made limited progress toward adoption. Current efforts are stalled by a combination of legislative opposition, a recent executive ban, and a focus on stablecoins as an alternative. Without Congressional consensus—which remains elusive given partisan divides—a U.S. CBDC is unlikely to emerge in the near term. Instead, the U.S. appears to be prioritizing maintaining the dollar’s global dominance through existing systems and private-sector innovations rather than a government-issued digital currency.
And private bank digital currencies are just as bad from what I've heard. I don't want the giant banks controlling me anymore than I want the government controlling me. The banks are in bed with the government so... The fact remains they want to control us... and I believe they are going to do this one way or another. If they can control our money they will control every aspect of our lives. What food we eat, what medicine/vaccines we *have* to take, etc. People will get in line for all of it when their money is on the line. It is a terrifying world system and I can't bear thinking about it.