Money, for which we work eight hours a day, giving up time with our family and friends to get it, and which we use several times a day, is something important. A change in its design and technology is of interest to society as a whole because it has economic implications, but also possible implications for privacy and even freedom, as I will explain below.

A recent announcement by the DIAN, about the creation of a digital currency (CBDC) in Colombia, which was later confirmed by the Bank of the Republic, in principle seems to be a decision oriented to technological development, it is justified in facilitating transactions between people and greater control to avoid tax evasion and money laundering. Additionally, it could help to reduce the costs of generation, storage and transportation of money, savings by eliminating intermediaries between the citizen and the Central Bank, and have cheaper and faster transactions.

There are countries that are experimenting with this digital money by opening wallets to citizens directly from the central bank, eliminating the intermediation of banks. Other countries are replicating the current financial model of including banks, maintaining inefficiencies with the justification of risks to the financial system, and by the pressure of these players not to be left out.

But just as there is one money better than another, can there be a digital currency or CBDC better than another? From an economic point of view, these currencies will continue to depend on the behavior of local economies and I would not expect so many changes in that sense. But citizens could opt for CBDCs other than the Colombian one, this could lead to scenarios of further strengthening of strong currencies and weakening of weaker currencies such as the Colombian peso.

Would they have implications for citizens beyond the economic? These digital currencies may or may not be designed to be fully traceable and without privacy, i.e., unlike the use of cash, every transaction can be recorded and monitored by the central bank and commercial banks. There are studies that show that human behavior changes when they know they are being watched, affecting the right to freedom. In addition, we must remember that privacy is a human right, and it is okay to have it. The problem of evasion and money laundering argued by the DIAN is valid, there is consensus around it, but it cannot be at the expense of privacy, there are other solutions.

To illustrate other possible risks, the Central Bank of China, who leads the implementation of CBDC globally, has proposed to program money to have an expiration date. In a hypothetical example of accessing a subsidy, it could be programmed to be used until December at the latest to spend it, otherwise you lose it. Or it might be programmed so that you can only buy healthy food, and you can't buy unhealthy cravings. Nor could you pay for things that are not legal in some countries, such as a driver's license for a woman in Saudi Arabia, or access to more than 200 dollars per month in Argentina.

But it doesn't stop there, you could also be denied access to your wallet and money, on the grounds that you are in breach of terms and conditions, or your political views are not in line with the government of the day. Think of the implications of not being able to access money.

This sounds like science fiction, but China is already blocking access to buy tickets for land and air transportation to people whose online behavior does not correspond with the government's political line, based on a non-transparent "digital social behavior index". They even do not allow the children of these people to attend public schools. Similar restrictions but on money could happen when the majority of the population uses the digital yuan.

It has implications that go beyond the economic and directly affect citizens, fundamental aspects such as privacy and freedom. It must be a transparent and open conversation, and not one of a few behind closed doors.

and what do you think about CBDC?