Central bank digital currencies are often classified as cryptocurrencies, but those who are passionate about decentralization often view CBDCs with suspicion.
On October 7th, Benoît Cœuré, Head of the Innovation Hub of the Bank for International Settlements (BIS), gave a speech entitled “Finance Disrupted”. The speech addressed various developments in the fintech sector. The crux of the matter, however, was that the central banks had to “intervene”.
In response to the speech titled “The Incumbents Are Taunting Us,” investment expert Anthony Pompliano criticized them in several ways.
First and foremost, Pompliano made it clear that he was shocked by the lack of bitcoin in Cœuré’s speech.
The moderator of the investment show wrote:
“The speech spends a lot of time with CBDCs, but it never recognizes the $ 1 trillion market capital that is delivered today by more than 100 million people worldwide, almost all major financial institutions, and which has recently become legal tender in a nation state. “
Cœuré had also discussed how private companies value profits over stable money. For this reason, Cœuré claimed that a public good like money needs central banks to maintain its stability.
Pompliano disagreed, citing the lack of a stable currency or full employment in the US. He further explained
“To make matters worse, the central bankers have enriched themselves drastically at the expense of the public. We have had several Fed presidents resign due to controversy over day trading and personal investing. “
The claim came days after US Senator Elizabeth Warren called Federal Reserve Chairman Jerome Powell a “dangerous” man. Warren also wanted the SEC to investigate Federal Reserve officials for insider trading.
Fight data with data
Next, Cœuré’s speech dealt with the problem of fintech firms collecting huge amounts of user data. Cœuré acknowledged that such data could make it easier for people with no credit history to use financial services. However, the board found that “overseers” also need more data.
When discussing a prototype that could analyze data platforms, Cœuré said:
“Tools based on the Ellipse project would enable regulators to digitally extract, query, and analyze large and diverse sources of structured and unstructured data relevant to the residential mortgage market, and to anticipate regulatory action, in real time.”
Pompliano then questioned the central banks’ motives. He said,
“There is a strong argument that providing more data to the central banks and the BIS is actually a net negative. It reduces financial privacy and citizens get nothing in return. “
CBDCs in surveillance?
Pompliano wasn’t the only one worried about his privacy.
In his newsletter, NSA whistleblower Edward Snowden described a hypothetical situation where a man at risk of diabetes might not be allowed to buy candy for his grandchild. Why? Because his insurance company could send personal health data to his CBDC wallet – which would prevent the grandfather from making an unhealthy purchase.
Snowden, for his part, defined CBDCs as a “perversion of the cryptocurrency”.