House money

As dictators and dissidents refine new measures and countermeasures for seizing or securing money and assets in their ongoing struggle with one another, governments around the world have been developing the technological basis for what’s almost the conceptual opposite of the decentralized cryptocurrency Bitcoin: a kind of digital currency that’s centralized not just in a private company but in the state itself. 

Central bank digital currencies—CBDCs—aren’t entirely new. Prototypes go back to the 1990s. While early iterations had all kinds of differences among them technically, they all shared the common theme of extending a government’s control over money and payments. 

Since 2019— the year Facebook announced its stablecoin project, Libra—a number of countries have introduced CBDCs, including China, India, and Russia. A few have even taken aggressive measures to drive CBDC usage, as Nigeria did by creating a cash shortage in 2022 or the Bahamas did by announcing in 2024 that banks would soon be forced to distribute their CBDC. Now, more than 135 jurisdictions in the world are either developing, piloting, or launching CBDCs—with several already making them available to the public. 

Why are they doing this? 

Roger Huang is a freelance journalist and the author of Would Mao Hold Bitcoin? Huang says the logic of central bank digital currencies is a technocratic one that can take a very different form between democratic and autocratic states—one shaped by the limited mission of central bankers; the other, by the systemic will to power of authoritarians. Yet in either case, CBDCs represent a fundamental shift in any financial system that would adopt them, creating direct relationships between citizens and central banks—and so, an extraordinary platform for governmental control. 

Which, Huang says, accounts for early patterns of resistance to CBDCs in democratic societies: While their central bankers might tend to see CBDCs as innovations that can support financial inclusion, payment efficiency, global competitiveness, and enhanced monetary-policy tools, citizens who’ve been consulted on them have shown a lot of skepticism. And where CBDCs have been implemented, adoption has been slight. Huang thinks these patterns have a logic of their own: Throughout the democratic world, there’s a widespread, deep reluctance to support any measures that would establish significantly more bureaucratic state power over people’s lives— meaning there’s now an unresolved tension between the technocratic logic inclined toward these digital currencies and the democratic logic inclined away from them ...

Brendan Hasenstab: What is a central bank digital currency, and how does it work?