Electronic Money vs CBDC: How Programmable Currency Changes Financial Control
In public discussions, electronic money is often confused with central bank digital currencies. Formally, both exist in a cashless form. But there is a difference between these systems that changes the very logic of owning and using money. In the current financial system, electronic money is a digital representation of the regular hryvnia, recorded through banks. The chain looks like this:
- the state sets rules and regulation;
- banks act as intermediaries;
- a person uses money through an account, a card, or an app.
A bank does not determine what exactly a person buys, where they do it, or at what time. The state can:
- restrict certain operations through laws or sanctions;
- set tax rules;
- regulate the banking system.
But each hryvnia does not have its own behavior logic. It does not “know” who spends it, where, or on what. Control happens after the fact, not at the moment of each purchase. That is why today:
- money can be accumulated without a time limit;
- funds can be spent in any region;
- cash payments are possible;
- the state cannot technically restrict the purchase of a specific product by a specific person in real time.
What CBDC Is by Its Nature
CBDC (Central Bank Digital Currency) is a digital currency of a central bank that exists not as a bank record but as a programmable payment instrument. The key feature of CBDC is programmability. This means that each unit of currency:
- can have conditions of use;
- can be tied to a specific person;
- can have time, territorial, or purpose-based restrictions.
In such a system, the intermediary in the form of a bank as a filter disappears. The logic changes from:
state → regulation → banks → person
to:
state → person
Actual Capabilities That Follow from CBDC Programmability
It is important to understand: this is not about political statements, but about technical capabilities embedded in the mechanism itself.
Restrictions on Goods and Services
CBDC makes it possible to set rules such as:
- how many times per day or per month a specific product can be purchased;
- the maximum purchase volume.
If a limit is set, for example, on fuel, exceeding it becomes physically impossible regardless of the number of gas stations or the method of payment.
Territorial Restrictions
A digital currency can function:
- only within a specific region;
- only when physically present in an authorized area.
Within this logic, the following can be blocked:
- transport tickets;
- hotel payments;
- rental payments;
- vehicle refueling.
Link to Digital Identification
CBDC logically integrates with:
- state digital ID;
- tax number;
- social or military registration databases.
In this system, each transaction automatically checks a person’s status, not just the account balance.
Expiration of Money as a System Feature
Another fundamental difference is the possibility of setting an expiration period for funds. This means:
- salaries or social payments are valid for a limited time;
- unused funds automatically disappear;
- saving money loses its practical meaning.
Extending the validity period can be tied to additional conditions, such as mandatory deductions or participation in state-defined programs. Technically, this looks like stimulating spending. In practice, it means eliminating a financial safety cushion.
Social Payments and Targeted Use
CBDC allows strict control over:
- where social funds can be spent;
- which goods are allowed;
- which retail locations are accessible.
In this model:
- pensions work only for an approved list of goods;
- social assistance cannot be transferred to another person;
- any alternative use is technically impossible.
Cash and the Informal Economy
The current system allows:
- cash payments;
- informal side jobs;
- emergency spending outside digital channels.
CBDC has no cash equivalent. This means:
- it is impossible to make payments outside the system;
- it is impossible to temporarily exit digital control;
- any economic activity is recorded automatically.
The Fundamental Difference
Electronic money today is:
- a digital form of regular currency;
- freedom of use;
- control through rules and laws, not through each transaction.
CBDC is:
- programmable access to funds;
- control at the moment of spending;
- the ability to impose targeted restrictions without direct prohibition.
Not through punishment. Through limiting access to one’s own money. This is the fundamental difference between today’s electronic money and a central bank digital currency.
It is important to understand that most of the scenarios described are neither current rules nor officially announced plans. They reflect the technical capabilities embedded in the very architecture of CBDC. A tool that allows money to be programmed can be used in different ways both to improve convenience and deliver targeted assistance, or to enable strict control. The direction it ultimately takes depends not on the technology itself, but on legal safeguards, political decisions, and public oversight. That is why the key question is not the existence of CBDC as such, but what safeguards are built into its implementation and whether society is able to influence the rules before they become irreversible.
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