Ppl are talking about new CBDC but the current Fiat system has been running digitally for decades now, what’s the difference and why all the fuzz?
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Current fiat system is either physical notes and coins. Money in a bank account is basically transferring of money between bank accounts. If you spent money in Walmart’s, all you could tell from a bank statement is what you spent at the store but not what you bought. It also requires multiple validations in order to finalise the settlement (the fact a transaction impacts your bank balance immediately doesn’t mean the transaction’s been finalised – particularly for credit card transactions).
CBDC is programmable money. From what I hear, finalised confirmation of the transaction would be instantaneous.
But importantly, programmable means controllable – and so they can not only monitor, but also directly control what you spend.
An example would be with stimulus checks. These were given out to stimulate the economy. A CBDC therefore could programme this money to expire within 30-days (as opposed to leaving in your savings account), and only be used for certain goods e.g. companies they felt were in need of additional demand.
Also with unemployment benefit, the current assumption is that you are dependent on that cash benefit. And so in the event of somebody lending you money, the government could detect this and so deduct it from your benefit.
These are samples off the top of my head – and I’m sure there’s nuances and legalities. Cash is far less controllable and transparent.
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