Bloomberg’s CBDC Push Gets Criticism for Ignoring Cryptocurrencies
Central Bank Digital Currencies (CBDCs) are touted for their potential to improve financial inclusion, security, and efficiency in cross-border payments. However, they have faced skepticism due to concerns about government surveillance, censorship, and control.
Bloomberg recently published an editorial praising CBDCs as a solution to cross-border payments issues, while also praising the efforts of the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) to build an interoperable CBDC network. However, Nic Carter, co-founder of Castle Island Ventures, criticized the article, calling it “the weirdest/most obscure commentary of all time
Bloomberg: CBDCs smooth out cross-border frictions
The authors of the Bloomberg article argue that interoperable CBDC networks will streamline and reduce the cost of cross-border payments. However, Carter points out that the private sector, through stablecoins and cryptocurrencies, has already solved these problems.
Carter emphasizes that while policymakers are still grappling with issues like KYC and outdated mail systems, private companies have found solutions. He suggests that Bloomberg’s editorial board may be biased against cryptocurrencies, despite the group’s well-intentioned contributions.
Central banks step up efforts
Despite the controversy surrounding CBDCs, including concerns about government oversight and control, many central banks around the world continue to push. A Reuters report says 134 countries, representing 98% of the global economy, are exploring CBDCs, with more than half of them in advanced stages and 44 in testing.
While some CBDC trials have struggled, such as Nigeria’s eNaira program, which has just 0.8% of its population using its wallet, Josh Lipsky of the Atlantic Council reports a shift in sentiment:
There was a view that countries that rolled out CBDCs had seen low or no usage, but in recent months we’ve seen a real uptick
However, opposition remains, with figures like US Senator Ted Cruz proposing legislation to ban direct-to-consumer CBDCs over concerns they could be used as surveillance tools.
The Downside
The debate between CBDCs and cryptocurrencies reflects the divide over centralized and decentralized systems. The Bloomberg article classified CBDCs as “cryptocurrencies.” Ecuador and Senegal have canceled their CBDC programs.
Why This Matters
CBDCs face significant public skepticism, especially in the wake of recent government overreach, such as the freezing of protesters’ bank accounts during the 2022 Canadian trucker protests against COVID mandates.