CBDC Surveillance: Financial Freedom vs. State Control Debate
Driven by the digital wave, Central Bank Digital Currencies (CBDCs) are steadily progressing from concept to reality. As blockchain technology, distributed ledger systems (DLT), and digital payment networks continue to evolve, Central Bank Digital Currencies (CBDCs) are emerging not just as electronic alternatives to cash, but also as strategic tools to connect legacy financial systems with the fast-growing digital economy. Their emergence concerns both the upgrading of financial systems and the delicate balance between national governance and individual liberty.
What Exactly Is a CBDC?
As the name suggests, a CBDC is a digital form of legal tender issued by a country’s central bank, and like traditional cash, it holds legal status. However, it exists electronically, typically operating on blockchain networks or centralized databases. Depending on the users and scenarios, CBDCs are generally divided into two types:
- Retail CBDCs: Designed for everyday use by the public, retail CBDCs enable routine transactions such as payments, savings, and money transfers. Their purpose is to serve as a digital complement to cash, improving the ease of use and expanding access to the financial system.
- Wholesale CBDCs: Aimed at use by banks and other financial institutions, wholesale CBDCs are primarily utilized for interbank transfers, high-value transactions, and international payments. They are designed to streamline operations and enhance transparency across the financial infrastructure.
This innovative tool goes beyond mere technical restructuring; it also has profound implications for monetary policy, payment behavior, and the rebuilding of social trust structures.
A Global Laboratory: How Far Has CBDC Come?
As of 2025, more than 78% of central banks worldwide are engaged in CBDC research or pilot programs. Due to differing economic structures, technological capabilities, and political motivations, countries have taken diverse paths in CBDC development.
China: The World's Largest Testing Ground
China’s digital yuan (e-CNY) is currently the most extensive CBDC initiative globally. Initiated in 2014 and piloted in cities like Shenzhen and Suzhou since 2020, the scope of its application has steadily expanded. By the end of 2024, it covered over 20 cities, with cumulative transaction volumes reaching hundreds of billions of yuan, used across retail, transportation, and even cross-border payments.
Europe and the United States: Cautious Progress
The European Central Bank launched its “digital euro” project in 2021, aiming to complete the design and testing phase by 2026. Europe's motivation lies in countering the threat of private stablecoins and improving the efficiency of payments within the Eurozone.
In contrast, the U.S. Federal Reserve has adopted a cautious stance. While it published a feasibility study on the concept of a "digital dollar" in 2023, it has yet to initiate any official pilot programs. This careful approach is largely due to the U.S. dollar’s strong position as the world’s primary reserve currency and the stability of its existing financial institutions.
Other National Experiments
The Bahamas launched the world’s first retail CBDC, the “Sand Dollar,” in 2020. Sweden’s “e-Krona” project responds to the continued decline in cash usage. Nigeria launched the “e-Naira” in 2021, hoping to improve financial inclusion. Despite varying contexts, these nations all place high hopes on CBDCs.
The Hidden Concerns Behind the Tech Glamour
While CBDCs demonstrate immense potential in terms of efficiency, cost reduction, and transparency, they also pose significant challenges.
First is the technological complexity. CBDC systems must meet high standards of security, availability, and cross-platform interoperability—requirements that come with hefty development and maintenance costs. Although blockchain offers decentralization and immutability, issues like latency, scalability, and energy consumption remain hurdles for large-scale adoption.
Second, the tension between privacy and financial surveillance is becoming increasingly prominent. CBDC transaction records can be fully stored in centralized databases, which enhances regulatory oversight and improves efforts to combat money laundering, fraud, and terrorism financing. However, the price of such transparency may be the erosion of individual financial privacy.
Tech libertarians and privacy advocates are deeply concerned that CBDCs could become tools for state surveillance. They warn that once governments can track every individual transaction with precision, a new era of "digital financial surveillance" may be ushered in.
Social Acceptance and Cultural Barriers
Even the most advanced technology must ultimately be accepted by people. The adoption of CBDCs is not merely a technical issue but also a psychological and cultural one.
In many regions with low financial inclusion, people are heavily reliant on cash. Due to unfamiliarity with digital technologies and distrust of government, skepticism toward CBDCs is widespread. Even in developed countries, many citizens reject any form of "traceable money" out of concern for their privacy.
To achieve widespread CBDC adoption, technical readiness must be accompanied by public education, legal frameworks, and efforts to rebuild institutional trust.
National Tool or Global Bridge?
CBDCs are not neutral technologies; they lie at the intersection of national interest, economic sovereignty, and social control. They can either serve as bridges to a more connected digital economy or become instruments that suppress financial freedom.
For this reason, the future of CBDCs should not be dictated solely by central banks and technologists. Instead, it demands public engagement, international cooperation, and transparent rulemaking to ensure that this institutional innovation does not evolve into a tool for authoritarian control or the erosion of democratic values.
The future of CBDCs remains undecided. They may herald a more equitable, efficient, and innovative global financial system—or they may slide into new forms of "digital authoritarianism" on the edge of privacy and freedom.
This battle over digital currency reflects a broader struggle within modern society: how to strike a new balance between efficiency, liberty, and control. The financial world of tomorrow may well be rewritten in the midst of this ostensibly technological—but fundamentally political—conflict.
