Why CBDCs Face Regulatory Challenges: An In-depth Look
Central Bank Digital Currencies (CBDCs) are reshaping the monetary landscape with promises of streamlined transactions and enhanced financial inclusivity. Yet their path to adoption is mired in regulatory complexities that demand scrutiny.
Privacy emerges as a primary concern. Unlike traditional cash, CBDCs risk eroding transactional anonymity—a double-edged sword for regulators balancing anti-money laundering efforts with individual privacy rights. The specter of government surveillance looms large in digital currency systems.
Financial stability presents another hurdle. The liquidity advantages of CBDCs could trigger rapid capital flight from commercial banks during crises, potentially destabilizing existing financial architectures. This systemic risk requires careful calibration by policymakers.
