Whether an account is in CBDC or a regular checking or savings account does not make much of a difference. Bank runs today are no different than in the past. It is all about lost confidence, fear, not wanting to be the last person out of a burning building, rumours, word of mouth, and psychological factors. That part has not changed. But what has changed is technology.
The difference today is that you don’t line up around the corner and wait for the chance to demand cash from the teller. You take out your Smart-Phone, make a few taps and, whether it’s Venmo or a wire transfer, the money can be transferred immediately. In any amount. Whether it’s CBDC, Venmo, wire transfer, or cash from an ATM, everyone is cashing out at the same time via digital channels.
But there is one huge impact of CBDCs, which is entirely new and sets it apart from what is described above. CBDCs are programmable and controlled by the government. This means when a run develops, the government can stop the run just by freezing CBDC account transfers. They can even claw back earlier transfers.
Since the government controls the CBDC ledger, they can see where the withdrawals went and simply reinstate them on the account of the failing bank and debit them from the accounts of the transferee. Once CBDC is implemented, we are locked into a system controlled by the government. There is actually no point even starting a bank run because the government can track your movements and put the money back where it started. It is one of many ways how CBDC give governments total control of your money and can monitor any movements.
We are already pretty much under surveillance. CBDC is the last step of total surveillance and control of your money.
Sven Franssen