Digital Dollars coming soon 2021

 



The chief economist of Bank of England, the central bank of the United Kingdom, proposed abolition of paper currency. The Bank has also taken an interest in bitcoin.[46][58] In 2016 it has embarked on a multi-year research programme to explore the implications of a central bank issued digital currency.[38] The Bank of England has produced several research papers on the topic. One suggests that the economic benefits of issuing a digital currency on a distributed ledger could add as much as 3 percent to a country's economic output.[46] The Bank said that it wanted the next version of the bank’s basic software infrastructure to be compatible with distributed ledgers.[46]

A Fed-backed digital dollar wouldn’t be a cryptocurrency based on decentralized blockchain, the ledger-based technology that underpins traditional digital currencies like bitcoin BTCUSD, +0.74%. It would merely be a digitized form of the fiat dollars that the Fed issues, and with which Americans are the most familiar, essentially antithetical to assets like bitcoin, in the eyes of cryptocurrency purists.

Or, consider U.S. economic sanctions. The foundation of U.S. sanctions is the unique status enjoyed by the dollar as a global reserve currency. “Even a company that has basically no trade in the United States, their banks do,” Jarrett Blanc, a senior fellow at the Carnegie Endowment for International Peace, told the Atlantic. “And so they basically can’t be banked if they are trading with a country that has been targeted with these very powerful U.S. sanctions.”

That is what sovereign-issued currency looks like, even when paid out or lent out by nominally ‘private’ banks. Because they all deal in national currencies, banks are not really as private as you might think. They are licensed by us, the sovereign public, to deal in our money—our Federal Reserve Notes, as our money bills call themselves.5

Digital currencies, including central bank digital currencies (CBDCs), present opportunities but also risks associated with privacy, illicit activity, and financial stability. This prospect has intensified calls for CBDCs to maintain the sovereign currency as the anchor of the nation’s payment systems.

“This is an important advantage for the U.S. in responding quickly to a crisis that policymakers in some other major economies lack," Ross Darrell Feingold, a lawyer and political risk analyst who has more than 20 years’ experience advising clients on doing business in Asia, told VOA.

The white paper also identifies a series of use cases for a US CBDC, including domestic peer-to-peer and retail payments, cross-border payments and remittances, benefits administration, and one-time or other exceptional government relief payments. The white paper concludes with the belief that exploring a “well-architected, durable, and universal digital dollar is in the national interest.”

Crypto-assets have drawn much attention of late. From Bitcoin’s market volatility,1 through what I call ‘Cryptopian’ enthusiasm, clean down to regulator puzzlement2 over how best to regulate Bitcoin’s cousins, stories in the financial press seem as often as not to concern digital currencies, blockchain technology, or any of a growing array of new topics now routinely lumped under the barbarous rubric of ‘fintech.’3

Making things worse, these currencies constantly fluctuated in value, both in relation to the goods and services they could command and in relation to one another. How much money you had in your pocket thus varied with whose notes you carried and when, even though all were denominated in dollars. Shopkeepers and tradesmen in consequence had to maintain regularly updated discount schedules behind their counters, instructing clerks how much to discount different banks’ notes in determining ‘how much’ (of what) to charge buyers for goods or for services.

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