Abstract

• Central banks are exploring, developing and implementing a new form of money: central bank digital currency (CBDC). In short, it is a digital version of a country’s currency issued by its central bank. • While significant research has focused on the economic and technological aspects, the governance perspective has not received enough consideration. This paper focuses on the topics of programmability and surveillance — from a governance perspective. • Two concepts of programmability are discussed: programmable payments that automatically transfer funds based on predetermined conditions; and programmable money that refers to restrictions on usage. These new technological options can support social policies; however, they also raise questions about the authorities’ influence and control, and how to ensure there is no abuse of power. • Regarding surveillance, privacy is considered the most significant challenge in CBDC design. Meeting anti-money laundering (AML)/combatting the financing of terrorism (CFT) requirements while offering cash-like anonymity seems incompatible. Authorities’ access to citizens’ data could lead to state-level surveillance, threatening civil liberties and human rights. Even if safeguards are put in place, CBDC infrastructure could be changed and initial safeguards overridden, rendering this risk a time-consistency problem. • This paper also discusses whether CBDC is needed and suggests that if it is, then legal protection for cash should be considered. Issues of centrality, pace and public involvement are compared with another new technology — artificial intelligence (AI). • Eleven policy recommendations are suggested on privacy and data rights, accessibility, public participation and oversight, prohibiting programmable money, legislation protecting cash and more. Ultimately, democratic institutions uphold trust in CBDCs.