People could speak out, but central banks are often steered by unelected officials who do not answer to the public. People could choose an alternative money, but governments often try to stomp out currency competition. So while the transparency is helpful for understanding how the system works, it does little by itself to help citizens who want to change the system.
Shifting the focus slightly, the U.S. code offers an illustrative example. Anyone can crack open the U.S. code, look to title 12, chapter 35, section 3413 and section 3414 to see there are 20 different exceptions that allow the government to effectively ignore your right to financial privacy. This transparency is certainly helpful for understanding how the government maintains such an expansive financial surveillance system, but transparency alone is not enough to fix the problem.
Another example of why open‐source code is not a silver bullet for fixing CBDCs can be seen in Norway where the Norwegian central bank also published the code behind its CBDC project. Yet here the problem is slightly different — it demonstrates that what is open source today may not be open source tomorrow. When dealing with a centralized entity like a national government, that decision can come quickly and without consulting the public. Norway’s central bank acknowledged this point quite explicitly by noting that its current focus in no way represents a long‐standing commitment to open‐source code.
As a final example, the experience in the United States also demonstrates that previous statements do not represent a future commitment to open‐source technology. The Federal Reserve has conducted CBDC research and pilots for years. However, one notable project was the collaboration with MIT. Referred to as “Project Hamilton,” this project led to the creation of an open‐source CBDC model. Yet, nothing binds the Federal Reserve to the results of Project Hamilton or any open‐source model. In fact, the Federal Reserve seems to have all but abandoned the project.
We are still seeing the very early stages of CBDC development, but these examples are telling. Policymakers should be commended for embracing transparency, but the public shouldn’t be fooled into thinking that transparency is a panacea that fixes all of the problems posed by a CBDC.
Although the use of open‐source technology has been one of the cornerstones of cryptocurrency development, people should not lose sight that decentralized cryptocurrency also gives people the power to act on that information. And it is that condition that has created a revolution in the way people think about money and finance.
There is no way a CBDC can replicate that benefit. The problems here extend far beyond the often‐obfuscated conduct of central banks and go right to the core question of how much power a government should have . Fundamentally, the problem with CBDCs is that they risk centralizing money more than ever before, so much so that it risks giving the government virtually unlimited power over citizens’ economic choices.
