The intense interest in cryptocurrencies and the Covid-19 pandemic have sparked a debate among central banks about whether they should issue their own digital currencies.
China has led the way in developing its own digital currency. It has been working on the initiative since 2014. Chinese central bank officials have already carried out massive trials in major cities like Shenzhen, Chengdu, and Hangzhou.
“China’s experiment is very extensive,” said J. Christopher Giancarlo, former chairman of the US Commodity Futures Trading Commission. “When the world comes to Beijing for the Winter Olympics next winter, they will use the new digital renminbi to shop, stay in hotels and buy meals in restaurants. The world will work.” [central bank digital currency] very soon, within the coming year. “
The USA are playing catch-up. In late February 2021, Fed Chairman Jerome Powell said the US would engage with the public on the digital dollar this year.
Proponents claim that central bank digital currencies could facilitate cross-border transactions, promote financial inclusion and ensure the stability of the payment system. There are also privacy and surveillance risks with government-issued digital currencies. And in times of economic uncertainty, people may be more likely to get their funds from commercial banks, which speeds up the bank run.
Watch the video above to find out how central bank digital currencies can become the future of global finance.