CBDCS: A DOUBLE-EDGED SWORD
Central Bank Digital Currencies (CBDCs) are digital counterparts to traditional fiat currencies, issued and overseen by national central banks. The U.S. CBDC, for instance, would be a digital dollar controlled by the Federal Reserve.
Key Aspects of CBDCs: Government Backing: Unlike volatile cryptocurrencies, CBDCs have stable value, backed by their respective governments. 1. Digital Ledger Tech: Though centralized, CBDCs may employ blockchain or similar technology for enhanced security. 2. Financial Inclusion: They aim to incorporate more individuals into the formal financial system, addressing banking deserts. 3.
But beneath these benefits lie significant concerns:
Privacy Implications: A U.S. CBDC could grant unprecedented surveillance capabilities to the Federal Reserve, potentially allowing them to monitor every digital transaction. This could lead to erosion of financial privacy, with citizens having little to no anonymity in their economic activities. Centralized Wealth Control: With the adoption of a CBDC, local community banks and credit unions could face existential threats. Central banks might exert more control, diminishing the ability for communities to store and manage their wealth locally. This centralization can jeopardize local financial empowerment and decision-making.
ISSUE 3 | DECENTRALIZED FINANCE & CENTRAL BANK DIGITAL CURRENCIES
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