Take a Closer Look? – Blockchain News, Opinion, TV and Jobs
Several countries in Europe, including Sweden, France and Germany, have explored the possibility of launching their own Central Bank Digital Currency (CBDC). In February 2021, the The European Central Bank (ECB) launched a two-year investigation into the viability of the digital euro. However, concerns have been raised about the potential impact of the digital euro on commercial banking systems and user privacy.
In the UK, the Bank of England is also exploring the possibility of launching a digital version of the pound sterling. The bank has set up a task force to explore the benefits and risks of CBDC and is expected to publish a discussion paper on the topic in 2021. Additionally, the UK government recently announced new plans to regulate stablecoins, which are digital currencies. pegged to fiat currency or other assets. The plan aims to reduce the risks associated with stablecoins, such as money laundering and terrorist financing.
Recent developments indicate that CBDCs are likely to become an increasingly important part of the global financial system. However, it is important to carefully weigh the potential risks and benefits of a CBDC and ensure that it is implemented in a way that maximizes its potential benefits while minimizing its potential disadvantages.
One of the potential dangers associated with CBDCs is the potential loss of privacy. Since the CBDC will allow the central bank to track every transaction made with the currency, there are potentially serious implications for privacy and personal autonomy. Governments can use this information to monitor and control citizens’ spending, limiting their ability to make purchases deemed “unhealthy” or “unnecessary”. This concern has been raised by privacy advocates and some members of the public.
Another potential hazard associated with CBDCs is the potential for increased oversight and control. Because the CBDC is fully digital, governments and central banks will have the ability to freeze or seize funds at will. It can be used to crack down on dissent or to punish individuals for behavior that those in power deem unacceptable. In addition, because CBDCs are fully digital, they can be subject to cyber attacks, which can result in loss of funds or other sensitive information.
Despite these potential risks, CBDCs can also offer significant benefits, such as increased financial inclusion, faster and safer transactions and reduced transaction fees. As such, policy makers should carefully consider the potential risks and benefits of CBDCs and ensure that they are implemented in a way that maximizes their potential benefits while minimizing their potential disadvantages.
