Digital currencies carry risks:
1. A CBDC give governments more ability to surveil their citizens, which raises concerns involving privacy.
2. Financial stability is also at risk because business models for banks and payments platforms would need to change if people are using government-provided digital cash.
3. If people maintain their savings and current accounts directly with a central bank, commercial banks lose retail deposits, their most stable source of funding.
4. Central banks must restructure operational capabilities to manage digital currency, supervise reserves and deposits, protect user privacy, prevent digital counterfeiting, and mitigate cyber attacks as well as other operational risks.
5. There are also national security implications, such as data privacy and security. Digital currencies will produce a lot of data on how individuals spend their money, raising concerns about surveillance, data manipulation and other privacy breaches.
6. Increased risk of cyberattacks, security breaches, theft of currency or personal information.
Sven Franssen