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Cointelegraph: Central Bank Digital Currencies Have The Power to Upend Global Finance

CrossTower

Alexandra Hamer

Alexandra Hamer

CrossTower‘s Kristin Boggiano discusses why central bank digital currencies have the power to upend global finance.

An astonishing 80% of central banks are engaging in work around central bank digital currencies, from research to experimentation and pilot programs. A recent Bank for International Settlements, or BIS, chart demonstrates the growing interest in CBDCs by central banks, as reflected in speeches and reports as well as people’s Google search interests over time.

One country, in particular, to watch in this respect is China, which is emerging as one of the leaders in the shift to CBDCs. The People’s Bank of China introduced its CBDC in pilot form in the major city of Shenzhen and plans to use it in the area of the 2022 Winter Olympics in Beijing. China has been working on a digital currency since at least 2014, and press reports suggest it could be in operation by 2022.

The implications of the introduction of a CBDC in the world’s most populous country and second-largest economy are likely to be important.

The United States is also taking important steps in its own digital currency initiatives. In August, the U.S. Federal Reserve announced steps toward implementing instant payments in the U.S. in 2023 or 2024. In addition, the Federal Reserve Bank of Boston is collaborating with the Massachusetts Institute of Technology to design and build a “hypothetical digital currency oriented to central bank uses.”

In the paradigm shift to CBDCs, the meaning, physicality and stability of money may change, and the value of money could be intentionally changed to help meet the policy goals of central banks and governments. This has many implications with respect to privacy, the use of data, the implementation of monetary policy, and the relationship between citizens and their governments. In addition, the concepts become more complicated when considering the cross-border implications of privacy, the use of data, and the relationship between noncitizens and foreign governments.

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