As of May 2022, more than 100 countries*, representing 95% of world GDP, are in some phase of CBDC exploration. Why are these central banks so interested in a CBDC? Some claim it's because it would enable central banks, and governments, to track and control citizens like never before in history.
Today, at a digital finance panel hosted by Banque de France, U.S. Federal Reserve chairman Jerome Powell said a CBDC in the U.S. would have "privacy protection." Immediately after, he contrarily states a CBDC would have "identity verification" and would "not be anonymous." See clip below.
Natalie Smolenski, of the Bitcoin Policy Institute, with Dan Held, has published a wonderful paper examining the main problems with CBDCs. The paper, "Why the U.S. Should Reject Central Bank Digital Currencies (CBDCs): Preserving the American Model of Political Economy Against Growing State Control of Economic Life," states that "...with both the imposition of CBDCs and the elimination of physical cash, the ability to anonymously transact will also be eliminated. This destruction of the last remnants of financial privacy is touted by governments as necessary to prevent financial crimes."
The paper also touches on the oxymoronic nature of "centralized blockchains." Central banks clearly see the value in the blockchain technology, but its decentralized nature would mean central banks relinquishing control. Smolenski elaborates, "...central banks are also aware that digital cash is the future, and they want to ride this wave of innovation. How can they participate in this technological advancement without abdicating their roles as creators and managers of sovereign (fiat) currencies? One popular answer: centralized blockchains."
The paper's warning of potential increases in privacy violating surveillance behavior toward individuals, by governments worldwide via CBDC implementation, is a valid one worth investigating further.
* The Central Bank Digital Currency Tracker by Atlantic Council provides data on all current CBDC projects worldwide.