Drawbacks, Disadvantages, and Cons of Central Bank Digital Currencies (CBDCs)

May 15, 2023
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By Leroy A. Brown

Central bank digital currency (CBDC) is a digital form of a central bank’s money with the same value and function as physical cash.

There are potential benefits to having a CBDC; however, there are drawbacks as well.

Some of the negatives, disadvantages, issues, and cons of having a CBDC are:


Privacy may be eroded as all financial transactions may be monitored and tracked in real time. Also, more personal information may be collected.


The government can conduct more surveillance as they can collect more data and do more tracking and monitoring.


Cybersecurity risks may arise as CBDC has to be online. Consequently, the network may be vulnerable to cyber-attacks.


Because CBDC needs to be online, a shutdown of the network may collapse the financial system.


Disintermediation of commercial banks may occur as these financial institutions may not be needed for deposits, payment settlements, and other financial products and services.


Implementing a CBDC may prove costly and complex as significant investments in technology, infrastructure, regulation, personnel, etc., may be required.


A CBDC can be programmed, and as such, it may be used to have greater control over individuals’ and businesses’ finances.


The implementation of a CBDC will require changes to the regulatory and legal framework that governs the financial sector.


Central bank digital currencies (CBDCs) do not stop governments and central banks from making bad policies, continue creating money as they wish, etc.


Having a CBDC does not stop or prevent economic recessions, inflation from rising, increases in interest rates, unemployment, etc. 


Most (if not all) of the benefits of a CBDC, like having cheaper, faster, and more effective financial transactions, already exist.

Also, cryptocurrencies are in use, and they allow more financial and utility functions to take place.

Additionally, the financial system will continue to improve as more innovations occur.

Therefore, there is no need for a central bank digital currency (CBDC).

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