Money, Power & Privacy: The Central Bank digital currency debate

Money, power & privacy: The Central Bank digital currency debate - Tenity Insights from Davos 2025.

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In the ever-evolving world of finance, Central Bank Digital Currencies (CBDCs) are becoming a key battleground. With 95% of central banks exploring digital currency initiatives, the race to regulate and redefine money is heating up. But as CBDCs gain traction, questions of financial sovereignty, privacy, and control emerge.

At the World Economic Forum in Davos, Max Plank sat down with Alexander Feenie from Chavanett Advisors to discuss CBDCs, stablecoins, and the future of digital money. This conversation, featured on the Innovation Connected podcast, sheds light on how global financial systems are adapting to new digital paradigms.

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The global CBDC race: who’s leading?

CBDCs are no longer a futuristic concept—they are actively being researched, developed, and, in some cases, implemented. Alexander outlines the scale of this shift:

“Let’s just say that there are 190-odd central banks… 95% of them are involved in either researching, developing, piloting, or have launched their Central Bank Digital Currency.”

Among the early adopters:

• The Bahamas (Sand Dollar, launched in 2020)
• Jamaica (Jam-Dex)
• Nigeria (eNaira)
• China and India, which are running large-scale pilots with transaction volumes 100 times higher than existing CBDC markets.

While these initiatives signal progress, Alex notes that full-scale adoption still faces technical, regulatory, and economic challenges.

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CBDCs vs. stablecoins: competition or coexistence?

One of the most heated debates in the digital finance space is whether CBDCs and stablecoins will complement each other or compete. Stablecoins—digital assets pegged to fiat currencies—have seen exponential growth. Alex provides historical context to explain their role:

"Stablecoins, I think, are proliferating everywhere… Before the Swiss National Bank was formed in 1850, Switzerland had over 860 different currencies."

The Swiss financial system eventually consolidated into the Swiss Franc, and Alex suggests we might see a similar process with digital currencies. However, there’s a fundamental difference:

"It’s important to remember that stablecoins are not money. CBDC is money. Stablecoins are only a reference to money."

The key distinction? CBDCs are issued and backed by central banks, while stablecoins are private-sector innovations, often pegged to reserves held by companies like Circle (USDC) or Tether (USDT). This raises a critical question: should central banks regulate or integrate stablecoins into the financial ecosystem?

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The privacy controversy: how much control is too much?

One of the biggest concerns around CBDCs is their potential impact on financial privacy. Governments argue that digital currencies can reduce fraud, money laundering, and illicit activities—but critics fear they could also be used as a financial surveillance tool.

Alex directly addresses these fears:

"Are they really threats? I think again it hinges a lot on privacy, anonymity, and whether or not you can transact privately and not be under the watchful eye of Big Brother."

Some argue that CBDCs could allow governments to freeze assets, track transactions, or enforce monetary policies more aggressively. Meanwhile, in countries where cash is still king—like Switzerland and New Zealand—there is pushback against fully digitizing money.

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Wholesale vs. retail CBDCs: what’s the difference?

CBDCs come in two main forms:

1. Wholesale CBDCs – Used for transactions between central banks and financial institutions.
2. Retail CBDCs – Digital money meant for everyday consumers.

"Wholesale CBDCs happen in the background… As end users, we don’t see it happening. But retail CBDCs? That’s the money we would use every day."

Alex explains that wholesale CBDCs are already in use within financial markets. However, the transition to retail CBDCs will require overcoming technological, regulatory, and consumer adoption barriers.

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The technology behind CBDCs: blockchain or something else?

With blockchain technology at the heart of many digital assets, does the same apply to CBDCs? Not necessarily. Alexander clarifies that while blockchain is suitable for wholesale CBDCs, retail CBDCs require higher transaction speeds than blockchain networks currently offer.

"You have fewer transactions in wholesale CBDC, and they’re large transactions. In retail CBDC, you quickly run into a transactions-per-minute (TPM) limit."

To make retail CBDCs practical, central banks are exploring centralized databases rather than blockchain, ensuring speed, scalability, and offline capabilities.

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What’s next for CBDCs?

CBDC development isn’t slowing down, but several key challenges remain:

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- Regulation – Ensuring compliance while maintaining financial inclusion.
- Privacy Protections – Addressing concerns over government control and surveillance.
- Adoption & Infrastructure – Building the necessary payment networks and integrations.

Some governments, like Singapore, are already exploring programmable CBDCs, which could be used for targeted payments like social benefits. Alex points to Singapore’s Purpose-Bound Money (PBM) project as an example of how central banks are testing the programmable features of digital currency.

"It ultimately comes down to the decision of the central banks—what technology they want to use and how they want that money to function."

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Final thoughts: Are CBDCs inevitable?

The global shift toward digital economies makes CBDCs seem like an inevitable step forward. But as Max and Alex discuss, the form they take—and their implications for privacy, control, and competition—are still up for debate.

As Alex puts it:

"CBDCs are not just another payment tool—they’re shaping the future of how money moves."

The question isn’t if digital currencies will dominate—it’s how they will be implemented and what role stablecoins, cash, and traditional banking will play in the future.

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