The age of central bank digital currencies
It seems central bank digital currencies (CBDCs) are becoming the lexicons of central banks these days; everyone wants to have these coins, opening up a new chapter in money. From Ghana to Nigeria and beyond, very soon, Bitcoin-incarnation controlled by governments will become dominant.
According to an Atlanta Fed survey, the share of consumers who used cash at least once a month dropped to 74.7% in 2020, from 82.4% in 2019. This trend, largely influenced by the safety of not carrying cash, the convenience of digital transactions — and after the onset of COVID-19 — it’s sanitary nature, is igniting conversations at the Federal Reserve around the need for a competitive alternative, per Axios. Though U.S. officials are still weighing the costs and benefits of creating their own central bank digital currencies (CBDCs) to combat the issue, many governments have already begun the process:
- On Wednesday, the European Central Bank announced it would start the process of developing a digital euro.
- In April, China became the first major world economy to formally create a digital currency.
- India and Sweden have already attempted to force a cashless economy by partnering with private sector banks.