Central bank digital currencies increase government surveillance and control over individuals' financial transactions

What's this about?

People disagree about whether central bank digital money, or CBDCs, would let governments watch and control payments more.

What supporters say

• CBDCs may need name checks, which could make payments less private than cash.
• A shared digital record could let officials see and search more daily payments.
• CBDCs might let officials set rules, such as payment bans or limits on stored funds.

What critics say

• Designers can build CBDCs with strong privacy, much like some cash payments.
• Banks and other firms could run the system, keeping the central bank from seeing every payment.

How to read this

The number of points on each side does not show who is right; strong proof matters more.

The bottom line

CBDCs could give governments more power to see and affect payments than cash does.

But we are not sure governments would use that power widely; the result depends on system design and use.

Central bank digital currencies (CBDCs) could give governments more visibility into—and possibly more control over—people’s financial transactions. But the outcome would depend heavily on how the system is designed, what payment methods it replaces, and whether privacy protections remain enforceable.

The case for

A CBDC would create a standardized digital payment system in which transaction records could be stored, searched and linked to people’s identities. That could make routine monitoring more systematic than it is with cash, where transactions normally leave no central digital record. Centralized administration and automated oversight could also give authorities more power to observe or intervene in payments.1

This does not prove that every CBDC would be used for widespread surveillance. The strongest evidence shows that the technology creates the capacity for greater visibility, while the claim that governments would actually use it that way remains more uncertain.

Digital money could also be designed with rules attached to it. Authorities or system operators might impose holding limits, restrict certain transactions or intervene at the account level—powers with no direct equivalent in physical cash.2 Such controls would matter most if a CBDC became dominant or mandatory. The evidence therefore points to a potential increase in government control, rather than documented widespread use of these restrictions.

CBDCs may also reduce the anonymity that cash provides. Compliance-focused systems would likely rely on identity checks, transaction thresholds, intermediaries and rules for sharing information, rather than offering cash-like privacy automatically. This could create a more identifiable trail for larger or suspicious payments.3 The advantage over cash is clear, though it is smaller when the comparison is with cards, bank transfers or mobile payments, which already produce extensive records.

The case against

Greater surveillance is not an unavoidable result of CBDC technology. Researchers have described privacy-preserving designs, including offline payments using trusted hardware, tiered access systems and distributed arrangements that limit what central authorities can see routinely.4 These approaches could offer privacy for low-value transactions or restrict access to transaction data.

They would not guarantee complete anonymity. Many proposals still include identity checks, transaction limits or routes for law-enforcement access. That means privacy-focused designs challenge the idea that CBDCs must increase surveillance, but they do not eliminate the possibility that transactions could ultimately be traced.

Another option is an intermediated system, in which banks or other regulated companies handle customer-facing payments while the central bank manages settlement. This separation could reduce the central bank’s direct access to personally identifiable transaction information.5 However, intermediaries would still hold records, and the government could potentially obtain them through data-sharing rules or legal procedures. The model limits direct central-bank visibility without removing government access altogether.

The comparison with existing payment systems is also important. A CBDC could increase surveillance relative to cash while offering as much or more privacy than some current electronic systems—particularly if it supports offline use, protects small payments and limits data access. Legal safeguards such as data minimization, purpose limits, judicial approval and independent oversight could further narrow government use, though they regulate access rather than erase the underlying data capability.

The bottom line

The evidence favours a conditional warning, not an unconditional prediction. CBDCs can increase government visibility and control compared with cash, and the evidence for that potential is strong. But there is no strong empirical record from widely deployed CBDCs showing that their introduction has actually produced a net increase in surveillance.

The result depends on architecture, the role of intermediaries, the payment options people retain and the durability of legal safeguards. Privacy-preserving designs are technically feasible, but their protections could later be weakened. Overall, confidence is high that CBDCs’ effects will depend on these choices, while confidence is lower that every CBDC will increase government surveillance in practice.