China and the United States are rushing to create a global digital currency by Daily Coin – albeit slowly

China and the United States are running to create a global digital currency – albeit slowly

The US dollar has been the undisputed global reserve currency for decades, but that may change soon. Since 2014, China has been silently working on its own central bank, the Digital Currency (CBDC), an e-version of its home yuan. And this year, the People’s Bank of China has launched a real-world beta test of its CBDC in more than 30 major cities to eliminate any errors. In June, it launched a digital wallet with 200 yuan (about ড 31) lottery for 200,000 citizens to take the jumpstart.

Over the past few years, several other countries have introduced small tests of the CBDC, including e-krona in Sweden and e-peso in Uruguay. Other countries are currently exploring their own CBDC projects in France, Korea, Russia, Canada, Brazil and South Africa. However, nothing has reached the scale of China’s CBDC rollout.

A source close to the US Treasury Department, who spoke to me on condition of anonymity, said China’s CBDC aspirations are an attempt to become the world’s future digital currency.

“We now know that China’s CBDC is much less ‘progressive’ than initially expected,” the source explained. “Instead of a new CBDC, it’s more of a digitized yuan. We’re sure China’s goal with ECNY (digital yuan) is to attack the dollar’s position as a global reserve currency, but we don’t know how effective it is.” “

What does China’s launch mean for the US digital dollar

U.S. Federal Reserve Chairman Jerome Powell was not worried during a Sept. 22 news conference when asked if he had any concerns about China’s head start in this global digital currency competition.

“I think it’s important that we get to a point where we can make an informed decision about this and make it happen quickly,” Powell said. “I don’t think we’re lagging behind. It’s more important to do this right than to act fast. We’re the world’s reserve currency. And I think we’re in a good place to analyze and make that decision,” he said.

Powell said the Fed is working on a paper that would announce the decision to launch a US CBDC, which could be ready in the next few weeks.

“We want to publish a discussion paper soon that will be the basis for public engagement,” Powell said. He added that “the final test [that] Will there be any obvious and practical benefits that would apply when evaluating a central bank’s digital currency and other digital innovations that outweigh any costs and risks? Federal funds such as social security benefits or assistance such as stimulus checks. Also, most of whom have mobile devices, which will be a basic CBDC access tool.

However, critics believe that some of the so-called strengths of CBDCs are also primary weaknesses. CBDCs are not crypto-coded, so they are not anonymous, and they will probably originate in a government-run blockchain. The movement of digital dollars can be tracked, so it will help stop terrorist financing and money laundering, government officials will have clear details of each of your transactions.

Presumably, U.S. state and federal tax agencies could track taxable transactions and make automatic payments at their discretion without prior notice. Also, depending on which political party is in power, the government imagines CBDC may politicize payments, such as blocking payments to charities or religious organizations – or blocking the use of CBDC for certain products, such as birth control or bullets.

What’s next for US CBDC?

Despite this challenge, if the United States launches its own CBDC, it has several advantages over what it currently has or is doing. The global reserve currency is not just the US dollar, its cash value is universal cash between countries and individuals, which will help in the use of its CBDC. And if the U.S. wants to receive its e-dollars quickly, it can only decide to issue foreign aid to the U.S. CBDC. According to the Council on Foreign Relations, since the United States has provided assistance to more than 200 countries worldwide, such a power could guarantee global uplift.

It is difficult to say for sure whether the US CBDC could be launched, but it is more difficult to imagine the world’s largest economy and global reserve currency next to the CBDC.

A Treasury source, speaking on condition of anonymity, said, “About the Fed, they are conducting a study and publishing some research on the potential of the US CBDC or digitized dollar, but I am personally interested in the US CBDC over a period of 18 to 24 months.” Regardless of what happens next, it will be interesting to see what happens next and what impact it has on the cryptocurrency world as a whole.

On the reverse side

  • Although they don’t seem to be there now, CBDCs will be a worse form of Fiat currency which means the current sovereign.
  • Expect that they will first start making CBDC payments compulsory for recipients of all types of welfare and social programs, who will have no choice but to accept it with some kind of premium incentive – if they only accept CBDC, say 10% more per month.
  • Then expect its withdrawal from military and government employees, who will be given a choice first but it will probably become a mandatory form of government pay within a few years.

Why should you care?

CBDC means one thing – control. Governments that deploy CBDCs will primarily present them as convenient “digital complements” to physical currencies. The physical currency will be phased out overtime and refilling will stop so that the paper currency will eventually run out. If you accept digital currencies – try to avoid CBDCs at any cost, as they will cost more in the long run than we can currently imagine.

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