Is this the end of cash? Central bank digital currencies implemented worldwide
How many people stand in line at the bank just to deposit checks or withdraw cash? At some point in the future, this will no longer be the case. Many economists and policymakers are starting to wonder if it’s time to replace cash with digital currencies. In today’s world, where digitalization is an integral part of our daily lives, it’s not surprising that such currencies are becoming increasingly popular. According to recent research, currently 130 countries around the world are working on implementing central bank digital currencies (CBDCs).
CBDC in the United States
One of the countries where intensive research is being conducted on the introduction of CBDC is the United States. However, unlike some other countries, the US is focusing on introducing a digital currency for the banking sector (wholesale), rather than for ordinary citizens.
A CBDC for the banking sector would serve as a digital version of the dollar, enabling quick interbank transactions. Currently, such transactions can be time-consuming and require the use of various systems and protocols. CBDC, as a digital solution, could simplify and speed up the entire process.
In the case of introducing CBDC for individual users, the digital currency would be available through private accounts or digital wallets offered by the private sector. The owners of these wallets could make digital payments in stores and participate in online transactions, without the need for traditional cash payment methods.
Concerns about privacy and abuse
Despite many benefits, introducing CBDC also comes with various challenges and concerns. One of the main concerns is the issue of data privacy. When using digital currency, all user transactions and financial information are collected and stored by the digital environment. There is therefore a concern that they may be used inappropriately if they fall into the wrong hands.
One of the voices supporting the introduction of CBDC in the United States is Senator Elizabeth Warren. According to her, CBDC can counteract unequal financial conditions and help fight financial crimes and money laundering.
However, to protect privacy and limit abuse, the CBDC Anti-Surveillance State Act (ASSA) has been proposed. This project aims to introduce control measures that would restrict the possibility of abusing digital currencies for surveillance purposes.
An alternative to CBDC
All these discussions about introducing CBDC lead to a certain question: is the introduction of digital currency the best solution for the United States? Some economists suggest that the US should focus on other solutions, such as tying the dollar to a commodity, preferably gold.
These measures aim to strengthen the currency and protect it from unfavorable actions in international markets. Gold has been regarded as a safe financial haven for centuries, and tying the dollar to a commodity could provide long-term stability and confidence in the US currency.
While the introduction of CBDC in the United States may accelerate and simplify many aspects of financial transactions, concerns and potential risks related to privacy and data abuse cannot be ignored. All these aspects should be carefully considered and taken into account when making decisions about the future of US finance.