CBDC: Centralisation and Monopoly of Data

Berentsen and Schar (2018) posited that CBCD could be used to track money laundering and other illicit activities that threaten a country’s security. This is a business case for the invention of this form of fiat money or fiat-blockchain money. In the work of Barontini and Holden (2019: 7), 70% of central banks are actively exploring CBDC and five are in the pilot stage. It is believed that Nigeria and China are among the countries in the pilot stage.

However, there are issues to be considered regarding the case against CBDC. To do this, three main subheadings will be used and concluded with a discussion question.

Data Centralisation:

It is believed in the tech sector that few companies control the data in web2 platforms. As such many policies and regulations have been made to control them, and also, they face a penalty when they go against such regulations. An example is the GDPR, a data privacy law applicable to all businesses of all sizes (Privacyshied, 2022). Many companies have been called to parliament to share insight about their company’s data policy.

Data Decentralisation

While the government was enacting regulations to control data privacy, the inventors worked on innovation to solve the problem. This is one of the ethos of web 3. It is a decentralised internet where no company or other individuals controls your data. The web 3 innovation birthed crypto, NFT, metaverse and others. Does the web 3 innovations have the capacity to solve the data centralisation problem of web 2?

CBDC Fueling Centralisation and Monopoly of Data.

The creation of CBDC is a reserved strategy of the government to control citizens’ money and transaction information. With CBCD, the government will arm itself with the tool required to track how you earn and what you spend your money on. As such, they can make policies to limit your spending; when you owe a fine, it will be deducted automatically. This could be termed the monopoly of data. With this, the government will be super powerful.

Here are the interesting questions for discussion;

  • How do you think the taxation and credit system will work with the CBDC, knowing the government controls your money?
  • Does government control over your money influence favourable policies or unfavourable policies?
  • There is a wave of carbon footprint per individual innovative project being worked on by the government. How will it work with CBDC?


Berentsen, A. and Schar, F. (2018) “The case for Central Bank electronic money and the non-case for Central Bank cryptocurrencies,” Review, 100(2), pp. 97–106. Available at: The Case for Central Bank Electronic Money and the Non-case for Central Bank Cryptocurrencies | St. Louis Fed.

Barontini, C., and H. Holden. (2019). “Proceeding with Caution – a Survey on Central Bank Digital Currencies.” BIS Paper No. 101.

European Union - Data Privacy and ProtectionEuropean Union - Data Privacy (2022) European Union - Data Privacy and Protection | Privacy Shield. Available at: https://www.privacyshield.gov/article?id=European-Union-Data-Privatization-and-Protection#:~:text=GDPR%20is%20a%20comprehensive%20privacy,for%20the%20movement%20of%20data (Accessed: December 7, 2022).


I went through this interview section of SCRF with four blockcahain experts discussing CBCD designs and benefits. I learnt alot and some of the discussion shed light on the question of this thread. Listening to it will make your comment rich.

Here is the link :


Thank you very much for this great work @Progrezz

In the aspect of data security, the web3 innovation resist the disclosure of important information, which an insiders in web2 disclose to the outsiders, malevolent parties.

Decentralization gives total control to users to make their data private or public in web3.
With smart contract, the system can run without human involvement.

Web3 transactions are irreversible and traceable, which made it the most powerful tools against frauds.


@Progrezz well this a nice topic but I will like you to share more lights on the difference between centralization and monopolization of data ?

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Thanks for the comment- it is taking us to the first principle.

Centralization of data is a concept i coin to explain a situation whereby an entity either government or company controls data. In this case the government uses CBDC technology to centralized data the way web 2 players centralize your data.

Monopolization of data is a concept i coin to explain a situation whereby it is only one entity that controls data. In this case, it is only the government that controls your financial information through the instrumentality of CBDC.


According to a study published by Open Knowledge on the Environmental Implications of a Central Bank Digital Currency (CBDC), the study investigated the environmental implications of CBDC by comparing technical mechanisms and energy consumption within its distributed structure. It also illustrates the ecological footprint differences between CBDC and other payment methods (cryptocurrency, cash, and card networks). CBDC does not need to demonstrate its legitimacy through its technological structure because its legitimacy is backed by the trust of central banks.

As a result, because CBDC does not require the energy-intensive consensus or mining mechanisms that cryptocurrencies do, its energy consumption is lower (comparable to that of a credit card system). CBDC can be built to use a variety of systems, including Real Time Gross Settlement (RTGS), Distributed Ledger Technology (DLT), or a combination of the two. As CBDC can be a catalyst for financial innovation, careful consideration will be required to meet the objectives and implications.


I think the question is not on the level of energy consumption of CBCD. It is how can CBDC be used as a tool to track and implement policies on individual carbon footprint.

For example, how much emission does your activities have per day, per month or per year? How will CBDC be used as a tool to help the government to reduce emission per individuals?

Perhaps the government may tax for emission and such tax be deducted without your permission.


@Progrezz Thank you for posing your question so eloquently. CBDCs are still in their early days, and it’s hard to know how far and how fast they might go, but it is clear that central banks will adopt new technologies that impact power use. Their energy-saving potential will depend on the use associated with other design features that may be added for compliance, to aid security and integrity, or to facilitate universal access. At the moment, I think it might be a bit challenging to track and implement policies on individual carbon footprints but this is not impossible though. We hope that there’ll be a breakthrough of this in the coming years.


@Progrezz " Does government control over your money influence favorable policies or unfavorable policies?"

I think Government control over money can influence both favourable and unfavorable policies.
The extent to which it does so depends on a variety of factors, including the specific policies being implemented. The motivation of the government officials making the decisions, and the political and economic context in which the policies are being implemented.

In some cases, government control over money may be used to implement policies that are considered favourable by some, such as providing financial support to individuals or business in need, or investing in public goods and services that benefits society as a whole.

However, government control over money can also be used to implement policies that are considered unfavorable by some, such as imposing taxes or regulations that are seen as burdensome or unnecessary, or using monetary policy to manipulate the value of a currency for political or economic gain.

Ultimately, the impact of government control over money on policies will depend on the specific circumstances and the perspective of those evaluating the policies.

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From this response, it is agreed that government can deploy CBDC as a tool for tax policy implementation. Let’s say you violate the traffic :traffic_light: rules and your are fined. With CBDC, the government doesn’t need to consult you to deduct it from your bank balance.

This and many more are the policies that may stem from CBDC


In regard to your question 1 in the post," How do you think the taxation and credit system will work with the CBDC, knowing the government controls your money?

Here is what I see I respond to how the taxation and credit system will work with the CBDC

Central bank digital currencies (CBDCs) are digital versions of fiat currencies issued and backed by central banks. They are intended to function as a secure and convenient means of making digital payments, similar to physical cash.

There are a few different ways that CBDCs could potentially be used in the taxation and credit system. Here are a few examples:

Payment of taxes: CBDCs could potentially be used as a means of paying taxes, either in lieu of or in addition to traditional payment methods such as bank transfers or checks.

Credit creation: Central banks could use CBDCs as a means of providing credit to the economy, either directly or indirectly through financial institutions. For example, a central bank could issue CBDCs to a lender in exchange for an asset, with the CBDCs then being used to fund loans to borrowers.

Monetary policy: Central banks could potentially use CBDCs as a tool to implement monetary policy, such as by adjusting the supply of CBDCs in circulation to influence interest rates or achieve other policy objectives.

It is important to note that the exact role and use of CBDCs in the taxation and credit system will depend on the specific design and features of the CBDC, as well as the regulatory and legal frameworks surrounding it.

If this was helpful and on point, I can further contribute my own opinion to the rest questions. Thanks


I think this is one of the favorites comments. The points were well highlighted and explained. However, the quoted part caught my attention.

You know we have Money supply which is always fixed and we also have money demand. With the fiat system, you can’t track who is spending a unit of money but with CBDC you can be able to track the specific people spending a unit of money being that it’s built with blockcahain.

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Very interesting Topic we have here.
Attending to one of your questions which says " Does government control over your money influence favourable policies or unfavourable policies?"

Though, Every policy has its Advantages and disadvantages, But I must say that government control over our money influences favourable policies. For instance, Online fraud and money laundering is a major concern in arguably all parts of the world. with CBDC most of these criminal crimes could be tracked down and it’s to our own advantage at large.


Have you also consider that there will be more cybersecurity threats with CBDC?
It takes a robust cybersecurity measure to solve the hacking issues posed by this innovation.

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I have another perspective to CBDC and here is what I think @Progrezz

Although the idea of CBDC seems reasonable at first glance, there are also considerable hazards. We learned that CBDCs could provide the government and the central bank the authority to watch on citizens’ financial activities, endangering their right to privacy.

I believe that if a retail CBDC becomes popular, consumers may move money from their bank accounts into CBDC wallets (software used for digital storage), which could eliminate the need for the banking industry to act as a middleman. In times of economic hardship, this can raise the cost of loans and worsen financial instability. CBDCs may offer central banks strong new tools for monetary policy with ambiguous outcomes, thereby enhancing the role and influence of the central bank over the economy.

CBDCs have been identified as a vulnerable single point of failure in the payments system, making them a target for cyber-attacks from criminals and hostile nation-state actors. The degree to which any of these risks are realized is heavily dependent on the final design of a CBDC.


CBDC will definitely ensure an innovation of monetary policies and will be a new tool for CBN to wield enormous power.
It’ll causes partial or total disintermediation of the commercial banks. But new sub industries will emerge due to CBDC.

Regarding cybersecurity, it is logical that nations government invest in cybersecurity to curtail all these.

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