Do central bank digital currencies threaten human rights?

Some quick thoughts on central bank digital coins (CBDCs) and human rights

(As ever, these thoughts are my own and do not represent the organizations I am affiliated with).

The Atlantic Council CBDC tracker reports that 120 countries are actively working on the development of CBDCs. CBDCs are digital forms of fiat money issued and regulated by central banks, which could potentially offer faster, cheaper and, critically, more inclusive payment systems (especially for the unbanked and underbanked populations).

With the rapid global adoption of crypto currencies and the growing use of hot and cold wallets, it is not surprising that central banks are exploring, piloting and launching CBDCs. The digital Euro could be in circulation as soon as 2027. However, CBDCs also raise important human rights concerns that need to be addressed before they are widely adopted.

One concern in particular, that strikes me - given the many years I have spent and continue to spend working with/ alongside civil society organizations - is the right to freedom of association, which includes the right to form and join trade unions, cooperatives, political parties and other groups (i.e. any form of civil society organization). CBDCs could enable central banks to monitor and control the financial activities of these groups, and potentially restrict or sanction them for political or ideological reasons. For example, a central bank could freeze or confiscate the CBDC accounts of a dissident group, or impose fees or limits on their transactions. This could undermine the autonomy and diversity of civil society and the democratic process. One need only consider the way in which many civil society groups - whether Russian human rights organizations, Congolese Women's empowerment groups or Syrian aid organizations - seeking to obtain banking services in the West struggle to even open accounts to realize that this is a real issue. (See here for a report I developed in my role at NYU Paris with ABN AMRO and the Human Security Collective on bank de-risking of non-profit clients).

?Another concern is the right to privacy, which includes the right to protect one's personal data and communications from arbitrary or unlawful interference. CBDCs could expose users to mass surveillance and data breaches, as central banks or other actors could access, track and analyze their financial transactions and identities. For example, a central bank could use CBDC data to profile and target users based on their spending habits, preferences, location, health, religion, ethnicity or political views. This could violate the dignity and security of users and expose them to discrimination, harassment or manipulation. Consider that CBDCs are essentially programmable money which would enable central banks to link spending habits online with various other data sets and, ultimately, access to goods and services. For example, access to welfare payments could be made conditional on any number of personal criteria e.g. not having a track record of spending “excessively” on alcohol or buying "gay propaganda" or other goods and services deemed undesirable, unnecessary or amoral on whatever public policy grounds.

?A third concern is the right to non-discrimination, which includes the right to equal treatment and protection before the law, regardless of one's status or characteristics. CBDCs could create or exacerbate inequalities and exclusion, as central banks or other actors could discriminate against users based on their access, eligibility, affordability or usability of CBDCs. For example, a central bank could exclude or disadvantage users who lack digital literacy, connectivity, devices or identification. Or a central bank could seek to control, coerce or otherwise disadvantage persons who belong to marginalized or vulnerable groups (LGBT+, migrants, Roma etc. etc.). This could limit the opportunities and choices of users and affect their social and economic rights.

A fourth concern is the right to private property, which includes the right to own, use and dispose of one's possessions and assets. CBDCs could undermine the security and sovereignty of users over their money, as central banks or other actors could manipulate, devalue or confiscate their CBDCs. For example, a central bank could impose negative interest rates, inflation, taxes or bail-ins on CBDCs, or seize them in case of debt, sanctions or emergencies. Towards this end, it will be important that CBDCs are designed to allow non-custodial wallets that preserve the users' control and anonymity, similar to cash.

Ultimately, and in line with my recent post on government human rights impact assessments for digital technologies, CBDCs should be designed and implemented in a way that respects, protects and fulfils human rights, and that ensures accountability, transparency, participation and remedy for any violations or abuses.

In addition, CBDCs should not replace or undermine existing forms of money, but rather complement and enhance them in a democratic financial system.?