Ray Dalio Warns CBDCs Could Hand Governments Sweeping Financial Control

Bridgewater Associates founder Ray Dalio warned on Monday that central bank digital currencies would give governments far greater visibility into financial activity, even as he played down its likely scale.

Speaking in one interview Joined by Tucker Carlson, Dalio said CBDCs “will be ready” in the near future but are unlikely to “become that big of a deal,” adding that they could function like money market funds while offering governments tighter control over transactions.

‘There will be a debate, but probably not [offering interest]’, then they are not an effective vehicle to hold because you then get a depreciation, he said. ‘You would rather hold a money market fund or a bond.’

While he acknowledged that CBDCs “have a lot of appeal” because they are “easy” and convenient, Dalio said they are a “very effective government control mechanism.”

Full transparency will be good for detecting and curbing illegal activities, but would also mean “the government has a lot of control,” he said. “What I mean is that all transactions will be known.”

Such control will spread to other areas, with CBDCs potentially being used by governments to automatically levy taxes and apply exchange controls, he said.

He added that CBDCs could allow governments to automatically enforce sanctions, restrict access for politically unfavorable groups, levy taxes and impose foreign exchange controls.

Dalio’s comments come as more than 130 countries or currency unions are in various stages of investigation, of which 72 are currently in advanced stages of development, the report said. Atlantic Council.

The figures include three countries, the Bahamas, Jamaica and Nigeria, that have formally launched CBDCs, as well as 49 jurisdictions, including China, that are running pilot programs.

Dalio’s concerns reflect views long held by parts of the blockchain industry, although critics see the issue less as oversight and more as a structural design problem.

Harry Halpin, CEO of decentralized mix network provider Nym Technologies, said the core infrastructure needed for CBDCs already exists within the banking system.

“Digital technology is already being used by central banks like the Fed to monitor relationships with commercial banks,” Halpin said Declutter. “It is a very small step to extend that visibility to individual accounts through a CBDC.”

Halpin said privacy-focused cryptocurrencies are designed to address these concerns, although such tools remain controversial with regulators.

Halpin contrasted the model with Bitcoin, whose decentralized architecture limits the ability of a single authority to monitor or restrict transactions, and said CBDCs represent “the opposite” of the system Bitcoin’s creator envisioned.

Dalio has mellowed towards Bitcoin as one in recent years portfolio diversificationeven as he continues to emphasize its limitations.

He has said that he has a small allocation in the assets and that investors should pay attention to it as an alternative form of money, and has sometimes expressed a preference for Bitcoin and gold over traditional debt instruments such as bonds.