CBDCs: A solution in search of a problem
In two articles in The Conservative Woman, Kevin Dowd presented a systematic critique of CBDCs, arguing that they constitute solutions seeking problems rather than addressing genuine market needs. Dowd contends that purported benefits of CBDCs—including enhanced payment efficiency, financial inclusion, and monetary safety are illusory since existing mechanisms such as deposit insurance, competitive banking reforms, and private digital currencies already address these concerns more effectively. The articles identify multiple structural disadvantages: CBDCs would likely disintermediate traditional banking by drawing deposits away from commercial banks, create operational inefficiencies through central bank monopolization of retail payment services, generate conflicts of interest between regulatory and operational functions, and require ongoing public subsidies to remain viable. Both pieces emphasize the privacy and civil liberties implications, suggesting CBDCs would enable unprecedented surveillance capabilities that could be weaponized against dissenting populations, while noting consistent public opposition evidenced by low adoption rates in pilot programs across multiple countries and significant resistance during public consultations. The empirical record shows CBDCs have been abandoned in Finland and Ecuador, while current implementations in countries like the Bahamas, China, and Nigeria demonstrate negligible per capita holdings and poor public acceptance, leading Dowd to conclude that CBDCs offer no demonstrable benefits while imposing substantial risks to financial stability, economic efficiency, and individual autonomy. https://www.conservativewoman.co.uk/central-bank-digital-currencies-all-downside-no-upside/
