Central bank digital currencies (CBDCs) are a global phenomenon. Over 90% of the world's central banks are actively exploring digital versions of their fiat currencies. Authorities promise that CBDCs will modernize payments, bring banking to the unbanked, and protect monetary sovereignty. But critics predict a very different outcome: a surveillance state in our wallets. In the US, lawmakers moved to ban a digital dollar, labeling it a "threat to financial privacy and freedom". As one analysis has it, "if Americans resist CBDCs as a backdoor to mass surveillance and control by the state, why would Europeans welcome them?"
This article reviews those risks – with a detailed look at China's e-CNY and the European Central Bank's digital euro. I will contrast them with a blockchain-based credit system (Gluwa/Creditcoin) that is designed to be decentralized and privacy-preserving.
China's e-CNY: A Watchdog on Your Wallet
China was the first major economy to launch a CBDC at scale. The People's Bank of China (PBOC) has signed up millions of users since pilots began in 2019 for the e-CNY (digital yuan). In cities like Chengdu and Hangzhou, municipal governments plaster official billboards urging citizens to "welcome and use" the digital RMB. The money behaves much like cash in the user's hand (it can be used via an app or card with no fee) but underneath it offers Beijing unprecedented transparency. The e-CNY opens up new forms of government surveillance and social control. e-CNY is not a decentralized cryptocurrency. It's on a closed infrastructure. All wallets and transactions inevitably pass through PBOC-operated systems and therefore are traceable by design. The e-CNY, analysts write, "carries significant risks, including increased state surveillance [and] compromised privacy" as China pursues a more "intelligible" and controllable economy.
That is, when a Chinese citizen uses their phone to make a payment with e-CNY, the transaction can be tracked by the state. The PBOC has been working on tools to tag or freeze accounts for illicit activity – or for purposes unknown to anyone outside the Party. Even senior security figures are not entirely reticent about this possibility: the head of the UK's GCHQ warned that China could use its digital currency to monitor its citizens and even evade international sanctions. In effect, by replacing cash with e-CNY, the Chinese state turns the simple act of spending into a digital surveillance event.
Europe's Digital Euro: Cashless Future or Data Mine?
The European Central Bank (ECB) is now rushing to introduce a digital euro. Officially, the digital euro is being sold as "electronic cash" – secure, widely available, and a complement to physical banknotes. ECB officials insist it would protect European monetary sovereignty. But they have also publicly pledged to privacy "only" so far. In ECB presentations, officials promise the digital euro will guarantee the highest standards of privacy for small transactions, but short of the true anonymity of cash. In practice, the plan is to allow pseudonymous usage for very low-value transfers (e.g., offline payments up to €50), with all larger transactions being fully traceable by banks and authorities.
Critics call this a privacy illusion. A pan-EU consumer group is warning that as currently proposed, the digital euro will lack the anonymity of using cash. Its own pending legislation would require even small online transactions to be reported and recorded. In fact, anti-money-laundering laws force all digital payments to be monitored, regardless of the size. Even buying a cup of coffee could be tracked. The overall impact is that no transaction is fully private: the system maintains a traceable record of who paid whom. The ECB acknowledges this tradeoff – in the abstract. It insists that it will never utilize the digital euro as a Big-Brother tool, yet the underlying design still leaves it an option.
And while Europe's leadership is pitching a CBDC as "freedom to pay" and a bulwark against foreign tech giants, Europeans are fearful of a loss of financial autonomy. One Reuters story covers increasing "Big Brother" concerns in Brussels: people worry that a state-run ledger would be tracking their every purchase. Indeed, although the ECB promises not to use data for commercial reasons, even its own task force admits: "Does that mean no data will be collected? Probably not." Then the inevitable questions follow: who will all this data be visible to – and could future rulers change the rules?
Programmable Money: Orwellian Possibilities
Beyond simple monitoring, CBDCs open the door to programmable cash – quite literally code that prescribes the manner in which money can be spent. Governments, in theory, could hard-code penalties or restrictions into one's digital wallet. For example:
- Spending restraints. Authorities would come up with rules that shut off or limit spending on certain goods. I see limiting binge drinking by capping nighttime alcohol sales or banning alcohol sales to those with alcohol-related offenses.
- Expiry dates. E-cash can be set to expire after a certain time, forcing recipients to spend it in haste or lose it. So-called "Orwellian" – automatic expiry dates for money – are technologically possible.
- Category controls. Governments might impose category-wide limits on spending (e.g., on luxury items or foreign travel) or flag specific merchants for heightened scrutiny, all enforced by the currency's code.
- Freezing of accounts. As all wallets are on a state-run ledger, an account could be frozen in an instant. A central bank running a CBDC can cut off individuals or whole groups at the press of a button, leaving them cashless at the state's discretion.
In short, CBDC programmability can turn money itself into a policy tool – for better or worse. Its boosters celebrate this as a way to deliver targeted stimulus or welfare. Detractors fear it would too easily become coercion. Once a surveillance infrastructure is built into the currency, it's "virtually impossible to close" that door in the future. In authoritarian regimes, these elements especially raise red flags: Human Rights Foundation analyst Alex Gladstein cautions a digital fiat "could become another tool of government repression" of minorities and dissidents. Even in democracies, the prospect of governments being able to monitor or manipulate every transfer has led civil-liberties groups to raise an outcry.
The Gluwa Alternative: Decentralized, Privacy-Preserving Credit
Conversely, Gluwa (and its Creditcoin blockchain) is built as a decentralized solution specifically for credit and lending that's impervious to centralized monitoring. Gluwa's network is a public, permissionless blockchain – i.e., no one party (whether government or big bank) has dominance of the ledger. Practically, it means loan and repayment data is inscribed on a decentralized chain, transparent (in encrypted form) to participants, but not secretly indexed by a state agency.
Gluwa is building credit access in emerging markets. Through its platform, partner lenders offer loans in stablecoins tied to local currencies. Importantly, Creditcoin delivers an immutable public history of each borrower's payment history. This enables an unbanked user – say, a small entrepreneur in Nigeria – to build a credit reputation on-chain. Each payment made on time is immutably recorded; when the borrower seeks fresh credit, any lender can review that history (with permission) to assess trustworthiness. In Gluwa's parlance, Creditcoin is "a borderless credit investment network" where borrowers "secure transactions on a revolutionary, immutable ledger".
Because the network is open, data ownership stays with the user, not a central body. A post on Creditcoin's blog explains that public blockchains are "user-driven AND owned," offering an "(optionally) privacy-preserving, public and open alternative" to centralized systems. That is, individuals control their own financial data. Lenders must make requests, and only loan data (not all personal spending) is written on-chain. Gluwa documentation even touts "transparent, privacy-preserving, auditing capabilities" as a core feature.
Gluwa and Creditcoin remove many CBDC risks in practice. There is no single "master ledger" of all transactions for a government to pore over. Instead, loan contracts are on a decentralized network. No one – not even Gluwa – can unilaterally freeze user funds or rewrite history once a block is confirmed. And because wallets are pseudonymous, users aren't required to reveal full identities in order to use the system. A permissionless blockchain removes limitations of traditional finance by ensuring no single entity has full control of the network.
In short, Gluwa's model flips the CBDC logic on its head. Rather than rails built by governments with potential backdoors, it offers a community-managed ledger on which privacy is embedded by design and any programmable logic is transparent and auditable. Borrowers build credit, not surveillance profiles, and capital flows between investors and customers without an unseen intermediary. As Creditcoin puts it, this offers an "open network for credit information sharing" – a market without borders instead of a closed system.
Conclusion
CBDCs unquestionably have the potential to upgrade payments and bring banking to more people. Yet as the Chinese e-CNY and European digital euro show, such advantages have strings attached. A state-run digital currency by definition gives the issuer a window (and switch) on every citizen's purchases. Even benign regulations can be retooled by future policymakers, with risks of censorship or privacy invasion. Conversely, decentralized blockchain options like Gluwa/Creditcoin strive to achieve financial inclusion without furtive surveillance. They give control to the people over their data and credit score, relying on open code rather than a single organization.
As nations look to the future of money, these stakes are vital to grasp. The CBDC debate isn't just technical – it's a matter of how much authority people hand over to the state via their digital wallets. Institutions and citizens alike must scrutinize promises of "digital cash" in relation to the privacy trade-offs they entail. Decisions made today will ultimately dictate whether the future of money is used to empower citizens – or to monitor them.