Economist Daywi Root has warned that the “programmable” nature of central bank digital currencies could make them tools of authoritarian control.
authoritarianism risks
South African economist Daywi Root has warned that central bank digital currencies (CBDCs) could become instruments of authoritarian control if governments abuse their programmable features.
At a recent conference, Root explained that CBDCs allow authorities to directly influence how people spend their money. He warned that the government could theoretically restrict purchases, seize funds or manipulate spending behavior.
“The value of a wallet on a mobile phone can increase or decrease,” Root said, adding that a CBDC gives issuing authorities visibility into every transaction.
Root acknowledged that actual CBDCs are likely to have security measures built in, but stressed that the potential for abuse remains large.
The economist contrasted CBDCs with private sector stablecoins, describing them as a “natural antidote” to state-controlled digital money. Stablecoins are pegged to fiat currencies or assets and are designed to maintain stable value and avoid the volatility of cryptocurrencies like Bitcoin.
Root cited the GENIUS Act, signed into U.S. law in July 2025, which requires issuers to hold 100% reserves of high-quality liquid assets, and expected its implementation to accelerate. Land peg projects such as ZARP and ZARU are already in operation in South Africa, but ZARU is limited to institutional use.
He suggested that communities could issue their own stablecoins backed by assets such as gold, tailored to local needs and offering low transaction costs.
The South African Reserve Bank has been researching CBDCs since 2021, starting with a retail feasibility study and then expanding to wholesale applications through Project Khokha 2x. Previous trials tested blockchain-based interbank payments and tokenization of bank bonds.
Despite these efforts, Root warned that small currencies like the rand risk being replaced by stablecoins pegged to the US dollar, which have lower transaction costs.
Root’s comments highlight the growing global debate over whether CBDCs are an innovation or a potential threat to financial freedom. As governments experiment with digital money, the challenge will be to balance efficiency, transparency, and individual freedom.
Frequently asked questions ❓
- What is a CBDC? Why is it important? CBDCs allow governments to control how people spend their money, raising concerns about authoritarian abuse.
- How can CBDC be misused by governments? Authorities can restrict purchases, seize funds, or adjust the value of your wallet, which can violate your privacy and freedom.
- What is the difference between CBDC and stablecoin? Stablecoins are tied to fiat-like assets and are seen as an alternative to government-controlled currencies and a safeguard against abuse.
- What is the South African Reserve Bank’s stance on CBDC? The South African Reserve Bank is exploring CBDCs through research and projects, but faces concerns about competition from stablecoins pegged to the dollar.
