Digital currencies are big news. China, the UK and other major nations are researching, and in China’s case, implementing their own forms of digital currencies in the shape of central bank digital currencies (CBDCs). Cryptocurrencies are also in the race to become means of payment, in spite of China’s recent ban on using them as such. Where is the US in all this, and can it still catch up with the field?
Michael Greenwald of Tiedemann Advisors, and a former Treasury official, gave his views on the situation in an interview earlier today on CNBC. He said that “the US needs a digital dollar in order to compete in the race for the future of money”.
He thought that the Covid situation had speeded up governments’ push for central bank digital currencies, and his concern was that the US would remain on the side-lines as Bitcoin and the digital yuan grabbed the lion’s share of payments.
When asked about security concerns over the US getting left behind, Greenwald said:
“I think that the Chinese with the digital yuan could go outside of Swift, which would be very difficult for US sanctions.”
He then went on to describe how the Chinese CBDC could potentially work, saying that if it could go global then OPEC could use it, Swift could integrate with it, and central banks that held dollars could swap over to the digital yuan.
Greenwald was asked to explain how CBDCs differ from cryptocurrencies such as Bitcoin and Ether. He replied:
“A central bank is not decentralised, and ultimately a central bank would be able to have oversight over them [CBDCs], and it would be backed by that country’s currency, so ultimately the United States would need to work with their allies in the UK for the digital pound and the yen, and elsewhere, where Ether and other cryptocurrencies would operate outside of central bank control.”
It appears that the future of money is in the balance. On the one hand we have these governments vying for control of their own currency, and in the case of China and the US, going for the bigger prize of the one global currency.
On the other hand, we have cryptocurrencies, decentralised and outside of government control. Some might say “the peoples’ currency.
This future of money could be decided over the next few years, and the stakes are incredibly high. Central control or decentralisation of the world currency will certainly shape how we go about our future daily lives.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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