A member of Germany's central bank, Burkhard Balz, has once again raised questions over the dangers of CBDCs, and how governments could create ways to ensure the stability of a national banking system. Balz contends that using CBDCs as a store of value isn't a good idea, and the public should only be allows to use them to transfer value. He also thinks that people should only be able to hold a limited amount of digital euros, so that central banks have more control over the CBDC.
“I am not so sure whether incentives could, in reality, prevent a digital bank run. Therefore, the technical implementation of CBDC would need to be thoroughly thought over and tested.”
Why it matters: Central bankers have a hard time understanding that many people don't trust them – and they don't have absolute power. As the current era of wild central bank actions lead to a breakdown of trust, decentralization is likely to appeal to a wider group of people, much like the situation that has unfolded in Venezuela. Central bankers like Balz simply don't understand that the banking model that exists today is broken, and major changes are coming to how people hold value. CBDCs are likely to fail, as people simply won't accept more wild ideas from bankers who have helped to destroy the most advanced economy in human history.
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