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Reportedly, 25% of U.S. consumers are using less cash now than before the COVID lockdowns. The world is progressing towards digital alternatives. People are in the lookout for and the central banks are looking for options to sustain their clients.
CBDCs are expected to boom as the virtual fiat. CBDCs will help money move like information. We need to look past the hype and focus on the reality behind these virtual fiats.
However, there is a Rookie question: How is a CBDC different from say, the fiat currency that I hold, transfer, receive, and spend today via my bank account, assuming that I never go to an ATM to withdraw it in physical cash and only spend/receive it electronically? What problem is a CBDC solving?
With today’s fiat currency, the central banks are unable to directly service to the retail market. In order to do that, they depend on Retail Banks. Here comes the problem, retail banks have their own hidden interests, which may not align with Central banks.
They can already freeze your assets in the current banking system too, can’t they? If CENTRAL BANKS control CBDC’s because they are digital, what’s to stop them from shutting off access to your acct, if they deem you to have incorrect political views or make poor food choices? It’s ultimate control.
The expectation is that CBDCs will be ‘a’ future digital payment, but not ‘the’ future of digital payments. There is already a more technically effective alternative that’s working with multiple major banks and has the first ever live CBDC – Bahamas Sand Dollar as somewhat of a trial.
Ripple insights when talking about key benefits of CBDCs states: “Enhances existing payment system by increasing the speed and efficiency of payments while reducing costs and failure rates. Promotes financial inclusion to increase access to financial services for under and unbanked populations. Encourages greater competition by reducing barriers to entry and boosting access to global markets through interoperability. Fosters innovation with advanced digital features like smart contracts and programmable money. Maintains control by ensuring Central Banks retain sovereignty over monetary policy and not allow alternative currencies to dominate the market.”
For now, very few people are caring about CNBCs other than the central banks who are trying to make a purpose out of it. By 2021, CBDCs is expected to create a global economy moving money like e-mail across the world.
For now, only cash and crypto seem to make sense – things are expected to change with the coming of CBDCs.
