The central banks' evil plan : What if digital banks were a gateway to Central Bank Digital Currencies?

Details

Supervisors

Coenraets, Jérôme

Faculty

Louvain School of Management

Degree label

Master [120] en sciences de gestion, à finalité spécialisée

Abstract

The banking sector has continuously evolved through the ages. Recently, the digital revolution has catalyzed rapid innovation, giving rise to digital banks. These institutions have capitalized on technological advancements, reshaping the financial landscape with user-friendly interfaces, competitive interest rates, and low fees. While digital banks seem to pave the way for a more modern financial ecosystem, they might also be unwittingly setting the stage for an even more profound societal shift. Central banks have other plans in mind and are heavily investing in developing Central Bank Digital Currencies. These digital currencies promise the benefits of digital transactions combined with stability and security. They however also introduce a potential for unprecedented control over financial transactions, threatening privacy and individual freedoms. As central banks explore adding social control as a fourth function to money, this seemingly beneficial tool could become a colossal Trojan horse, jeopardizing the very nature of democracies. While early CBDC projects like the Bahamas' Sand Dollar and Nigeria's e-Naira have faced modest adoption, almost all central banks are developing their projects. The preservation of cash is emphasized as a critical safeguard for privacy and freedom. Legislative efforts and citizen awareness are crucial defenses against the centralization of monetary control. As the march towards Central Bank Digital Currencies gains momentum, the role of digital banks in this transition becomes clear. They act as a gateway, facilitating the adoption of digital currencies and ultimately leading to their own demise.