how is a digital currency, such as the digital euro, different from regular currency?
In: 5
A Central Bank Digital Currency (CBDC) has many advantages.
* it replaces cash, which is already in decline.
* they are directly backed with the underlying government fiat currency.
* wholesale CBDCs are targeted at institutions, digital cash should facilitate faster and more efficient settlements (at least in the local economy)
* retail CBDCs targeted at you and I, would help in that social benefits could more easily be distributed, think of the recent cost of living payments. Taxes could be taken at point of sale.
* reduction of fraud and money laundering
Note that all of the above are also DISADVANTAGES with respect to retail users! It gives more control and monitoring of citizens by possible corrupt governments. Think of China’s social credit system, think of Canada freezing the accounts of Freedom Convoy truckers.
CBDCs do nothing to correct underlying systemic problems with fiat currency, inflation is still an issue, governments who reduced interest rates to zero to ‘stimulate the economy’ would now be able to create negative interest rates since you could no longer withdraw cash from your bank.
Lots more issues, governments will use any excuse to introduce CBDCs, such as a financial collapse of the current system. One that may happen naturally, or if you are into conspiracy theories, be engineered.
You have been warned.
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