Now or never-the U.S. must prepare for digital currency

Welcome to the world of central bank digital currency or CBDC, where large countries such as China and small countries such as the Bahamas are working hard to prove their existence.This is a 86% central bank in the world Trying to create digital currencyNearly 60% of them are studying this concept, and 14% have launched a pilot program.

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CBDC: a global perspective

CBDC is a digital version of a national currency that can be exchanged globally. Unlike national currencies, you can keep digital currencies on your smartphone to buy anything you want.

Five countries have launched their digital currencies.Atlantic Council Believe About 81 countries (accounting for 90% of the world’s GDP) have begun to study digital currencies. And this is just the beginning.

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According to a survey by the Bank for International Settlements (BIS) Released in January, There will be a digital currency boom in the next few years. According to BIS, countries that account for one-fifth of the world’s population will soon launch digital currencies.

China currently ranks among the best in the league.They already Make The transaction value of its CBDC (digital renminbi) exceeds USD 5 billion. Some people worry that this will help China gain an advantage over the dollar.

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But how can you use CBDC? Well, there are various methods. They can buy necessities such as food and medical supplies. However, it is best not to use digital currency to buy alcohol or cigarettes. During a pandemic, digital currencies can also come in handy. It can quickly provide government assistance through digital wallets. It can also help the government stop misconduct.

Is the United States ready to enter the world of CBDC?

United States Federal Reserve Still skeptical about the efficacy Central bank digital currency. They are still a few years away from developing their own digital currency.At the same time, according to Bank of America report, The digital currency will enable the U.S. dollar to “maintain highly competitive…compared to other currencies.”

U.S. House of Representatives Financial Services Committee hold Hearing on the pros and cons of the central bank’s digital currency. Many people who attended the hearing, including Julia Coronado of MacroPolicy Perspectives, Express They believe that the United States must be more serious and play a leading role in the CBDC.

China is already leading, and other countries are advancing steadily. If the United States continues its leisurely attitude towards digital currencies, it will lose the opportunity to determine the future of digital currencies.

Possible reasons for the US’s laid-back attitude towards digital currencies

One possible reason why the United States has not taken active measures against digital currencies is that the U.S. dollar still dominates.But what the U.S. does not understand is that CBDC can deduct U.S. dollars from its First As the future global reserve currency status.

Digital currency will remove the barriers for countries to directly conduct financial transactions. They will no longer have to rely on the U.S. dollar. One reason the US dollar dominates the world is because it is a reserve currency. People use it for convenience. But with the advent of digital currencies, these people can settle directly between trading pairs.

related: China’s CBDC is about domestic dominance, not beating the dollar

The U.S. dollar is an integral part of U.S. foreign policy. The federal government can prohibit sanctioned countries from entering the U.S. dollar-based system.

Now, everything depends on the United States. If the country does not launch its own CBDC, it may not be able to obtain much cross-border transaction information in the future. If other countries use digital currency for transactions, they don’t need to use the U.S. regulated global banking, financial and telecommunications association network.

What can the United States do?

One disadvantage of digital currency is the lack of privacy. Many Americans may not like the fact that the government can easily monitor transactions using digital currencies. The US government can play an important role in alleviating such concerns. It can develop a digital currency that does not cause privacy violations. according to To Chris Giancarlo, co-founder of the Digital Dollar Project:

“If this becomes the technology of the future, we want to ensure that the United States can embody democratic values.”

Final notes

A close examination of the current scene shows that digital currency will continue to exist. Digital currency can help the central bank directly coordinate with people. This is very useful in times of crisis.

The widespread use of digital currencies may reduce the operating costs of the global financial industry. It may become the most convenient way to conduct financial transactions and push us towards a cashless society.

Will it completely eliminate cash? Well, it is too early to predict, because cash is still the most private form of currency. The central bank does not recommend the complete elimination of cash.

Will it replace Bitcoin (Bitcoin) Or other cryptocurrencies? The fundamental difference between CBDC and cryptocurrency is that the first is government digital currency, and the second is non-government digital currency. As of now, CBDC is unlikely to replace cryptocurrency, which is convenient for private transactions (although it is unregulated and vulnerable to hacker attacks).

Next comes the next big question: What is the position of the United States in the CBDC world? The answer is simple. If the United States is not ready for digital currency, it will stay on the sidelines. It will lose the opportunity to create a democratic and privacy-conscious digital currency. according to Michael Sung of Shanghai Fudan Oceanwide Financial Technology Research Center said: “You will see a huge shift in the international monetary system.”

If this is true and digital currencies are widely used, then the value of the U.S. dollar as a global currency will decline. If the United States takes wise action and develops a digital currency, it can bring approximately 14 million U.S. adults without bank accounts into the financial system.

The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Lyle Solomon He is the lead attorney of Oak View Law Group in California, specializing in consumer bankruptcy issues. In addition to extensive litigation experience, Solomon has also written several articles on financial status.