CBDC: the digital currency of the central banks – pros and cons
More than 100 countries are examining or developing CBDC (Central Bank Digital Currency) – a digital currency issued by the central bank. Is it good, bad, or simply inevitable?
Thank you for reading this post, don't forget to subscribe!What is CBDC?
CBDC is a digital version of fiat currency (shekel, dollar, euro). Unlike Bitcoin, it is completely centralized and managed by the central bank. Unlike a credit card, it is “direct money” – a direct debt of the central bank.
The leading projects
China’s Digital Yuan (e-CNY): most developed, tested by tens of millions of people. Digital Euro: in the EU in the pilot phase. Nigeria’s e-Naira: One of the first, but low adoption. In Israel, the Bank of Israel has studied a digital shekel but has not yet announced a launch.
Advantages
Unbanked economy gets financial access. Fast and cheap interstate payments. Transparency to the state for taxation and prevention of money laundering.
Concerns and privacy
The biggest risk: CBDC allows the government complete control over spending. Psychologically, it is “expirable money”. Fear of total supervision. This is one of the reasons the crypto movement opposes CBDC. Read about US crypto policy.
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