“Digital currency is coming,” says Paul Melchiorre of R3. “I hope we can get our [act] together for the dollar before it’s too late.” e-CNY
s) — electronic money based not on some salesperson’s futuristic pitch for private-money electronic “tokens,” but on today’s familiar national currencies, backed by central banks and powerful governments.
Supporters of CBDCs say an explicitly digital Federal Reserve dollar, operating on a secure, high-speed network under careful rules, could cut down on the fees charged by banks and other intermediaries. It could also take a lot of the pain and insecurity out of distant transactions by setting programmable conditions for making payments in compliance with each nation’s laws.and others fear this could give central bankers new access to personal and business spending records.
According to Rutter, a digital central bank currency can coexist with old-fashioned cash even as it replaces more cumbersome electronic systems; it can be designed with “cash-like privacy features.”Why now? I asked Melchiorre. “China has a digital yuan,” and it‘s using it to bully its many trading partners into abandoning the dollar, which threatens to weaken American financial power and drive up the cost of imports.
China’s push has U.S.-aligned countries studying whether to develop their own digital currency powers. “The more central banks adopt [digital currencies], the greater potential there is for money to be moved across borders in a more direct and efficient way,” cutting costs and opening businesses to more investment and more customers, he said.
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