Global central bank digital currency (CBDC) efforts are threatening to give financial institutions more control over the money supply and personal savings, while the transatlantic divide in financial technology between the U.S. and Europe is widening.
CBDCs are digital versions of fiat currency, typically issued on permissioned private blockchains controlled by central banks, rather than decentralized blockchain networks.
"Not all digital currencies are the same," said Susie Violet Ward, financial analyst, co-founder, and CEO of the think tank Bitcoin Policy UK, warning that CBDCs represent "the purest form of weaponization of currency."
Ward stated during Thursday's Cointelegraph Chain Reaction daily X space program that this new form of programmable money threatens to give central banks more control over spending, including the potential for personal savings to have "expiration dates." She added:
"Even George Orwell did not predict the emergence of programmable money. It almost perfectly closes the loop of 1984," she added, referring to Orwell's dystopian novel that depicts a world where an oppressive central government controls major aspects of human life, including public opinion and freedom of speech.
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The transatlantic divide between Europe and the U.S. is widening, with the former advancing its digital euro initiative while the latter doubles down on stablecoin innovation and bans the creation of CBDCs.
According to Cointelegraph, on Friday, the U.S. House of Representatives added a provision to a nearly 1,300-page bill setting the country's defense policy for fiscal year 2026 that prohibits the Federal Reserve from issuing CBDCs.
The provision in the defense policy bill would ban the Federal Reserve from issuing any digital currency or asset and prevent the central bank from directly providing financial products or services to individuals.
The House passed a similar Republican-backed bill, the "Anti-CBDC Surveillance State Act," by a narrow margin of 219 to 210 votes in July, which is currently awaiting a Senate vote.
On January 23, former President Trump signed an executive order prohibiting the establishment, issuance, circulation, or use of CBDCs, citing concerns that they could threaten the stability of the financial system, personal privacy, and national sovereignty.
Nevertheless, the European Union continues to advance its digital euro initiative, reportedly exploring major public blockchains like Ethereum for its CBDC, rather than limiting data to private blockchains authorized for specific entities.
European Central Bank President Christine Lagarde stated at a press conference that the digital euro is expected to launch in October 2025, emphasizing that CBDCs will coexist with cash and provide privacy protections to address concerns about excessive government intervention.
While CBDCs are praised for their potential to increase financial inclusion, critics express concerns about their surveillance capabilities.
In July 2023, the Central Bank of Brazil released the source code for its CBDC pilot, and within just four days, observers noted surveillance and control mechanisms embedded in its code that allow the central bank to freeze or reduce user funds in CBDC wallets.
Related: Wall Street Journal: After the Biden administration "weaponized" banks, the Trump family turns to support cryptocurrency.
Original article: “Think Tank Analyst: Central Bank Digital Currency (CBDC) ‘Perfectly Closes the Loop of Orwell’s 1984’”
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