Any good implementation of a central bank digital currency should have some anonymity handling, or it's not really a good cash replacement (Unless the goal all along was monitoring, which of course will be the case in some countries). Being able to spend $500 on something without anyone knowing is important. As is not beig able to launder $5M without anyone noticing. "Tomatoes, not diamonds" is the key feature here.
That's the kicker; I don't believe there's any government that wants anonymous digital cash. If anything, they want to be the only ones that can track it.
Now you are assuming that "governments" and "citizens" are two disjoint groups with different agendas. That's a really bleak way of looking at it, at least in functioning democracies. I'd certainly protest loudly if some sort of anonymity wasn't part of the plan at every step.
It's bascically exactly how the bank+card+cash system works. When I purchase a car with a bank transfer, it's easily traceable. When I purchase a guitar with my card, it's traceable. But if I really want to buy something untracably I go to an ATM and get cash. Similarly in any CDBC that citizens shouldn't be protesting loudly about, you can simply grab cash-like tokens. They might have an amount cap, but so does cash. You could never really go and fetch an unlimited amount of cash without having authorities ask questions due to KYC requirements.
> Now you are assuming that "governments" and "citizens" are two disjoint groups with different agendas. That's a really bleak way of looking at it, at least in functioning democracies.
Functioning democracies are sort of like spherical cows or frictionless surfaces: they don’t actually exist but we pretend they do as a simplifying assumption. Sometimes we are having more sophisticated discussions about bovine anatomy or the friction of ice; other times we discuss the principal-agent problem as it applies to the administrative state within a democracy.
From "Money and Payments: The U.S. Dollar in the Age of Digital Transformation"
"Identity-verified: Financial institutions in the United States are subject to robust rules that are designed to combat money laundering and the financing of terrorism. A CBDC would need to be designed to comply with these rules. In practice, this would mean that a CBDC intermediary would need to verify the identity of a person accessing CBDC, just as banks and other financial institutions currently verify the identities of their customers.
In this regard, a CBDC would differ materially from cash, which enables anonymous transactions. While central banks are unable to fully prevent cash from being used for illicit purposes, a CBDC could potentially be used at much greater scale and velocity than cash, so compliance with laws designed to combat money laundering and funding terrorism is particularly important for CBDC."[1]
"Protecting consumer privacy is critical. Any CBDC would need to strike an
appropriate balance, however, between safeguarding the privacy rights of consumers and affording the transparency necessary to deter criminal activity."[1]
Privacy is somewhat considered, like in question 12, (How could a CBDC provide privacy to consumers without providing complete anonymity and
facilitating illicit financial activity?) but to me it sounds more like privacy as in safeguarding information from third parties than privacy from traceability.
> a CBDC would differ materially from cash, which enables anonymous transactions.
Anonymous transactions are possible with a CDBC too. For example as outlined in the link I posted in the message above.
The idea is similar to Gnu Taler: you withdraw CBDC funds onto some physical "cash card". The amount you can do would be limited, just like the amount of cash you withdraw from a a bank is usually limited. But it does mean that how you then spend the tokens on that "cash card" should be as hard or harder to pin to an individual than a cash spend - i.e. nearly impossible.
I don't disagree it's possible to have a CBDC and anonymity, but based on the fed's statements like the part you quoted it seems like from their perspective anonymity no longer being possible would be a feature.
I don’t doubt that some governments would see it that way (although I do doubt the fed would pull that off).
My argument is merely a) that there is nothing inherent to a CBDC making anonymous transactions impossible b) there are governments recognizing that this is an important feature of their planned CBDC - as they should.
the question becomes, are systems that are made up of humans making decisions, organisms themselves that make decisions against the humans within the system?
