Very well put. If you are a freedom seeker, never start using government printed digital currency. They will be printed in infinity and as you said:
"Central banks could use private blockchains to administer national digital currencies that permanently record and track every transaction in the economy. "
These Central Bankers need to familiarize themselves with Andreas Antonopoulos' "Blockchain vs. Bullshit" presentation:
What they're describing can already be done (and is already done) with plain Jane SQL databases. This latest BIS paper strikes me far more as a public relations piece than a genuine suggestion; sure, they might try with projects like R3 Consortium's FedCoin, but whether or not blockchain can offer centralized financiers more features at lower cost for Central Banking goons is yet to be seen.