This week, the Human Rights Foundation launched its central bank digital currency tracker, an effort to chart the “development and implementation” of CBDCs worldwide. My Cato colleague, Nick Anthony, is the HRF fellow who led the project.

Their work shows that of the world’s 193 governments, at least 119 are currently researching, piloting, or deploying CBDCs. While other groups have launched similar efforts, the HRF’s tracker has a unique focus on “how CBDCs will impact the civil liberties and human rights of people living under authoritarian regimes.”

As it stands, Americans do not have the same constitutional protections for their financial data as for other types of personal effects. For example, while law enforcement needs to demonstrate probable cause that a crime was committed to obtain a valid search warrant for someone’s home, the same protection does not apply to someone’s financial records at a bank.

The Bank Secrecy Act is the foundation for an extensive anti-money laundering surveillance and regulatory framework, one that requires financial institutions to carefully identify their customers and monitor their transactions for “suspicious activity.”

The idea that any arm of the federal government would create a CBDC that doesn’t rely on any kind of identifying information, creating some kind of anonymous digital dollar, strains all reason.

Objectively, a fully functional CBDC is an instrument of autocratic control. It is not just another form of money. It cannot coexist, on a widespread basis, with alternative monetary instruments. It simply can’t provide the touted benefits if people are allowed to choose their preferred method of purchasing goods and services, and it can’t function as designed if it maintains users’ anonymity.

A CBDC fully usurps the private sector in the provisioning of money. For all these reasons, a CBDC is incompatible with a functioning democracy.