The intense interest in cryptocurrencies and the Covid-19 pandemic has sparked debate among central banks about whether to issue their own digital currency.
China is at the forefront of developing its own digital currency. It has been working on the initiative since 2014. Chinese central bank officials have already conducted large-scale trials in major cities, including Shenzhen, Chengdu and Hangzhou.
“China’s experiment is very large-scale,” said J. Christopher Giancarlo, former chairman of the US Commodity Futures Trading Commission. “When the world arrives in Beijing for the Winter Olympics next winter, they will use the new digital renminbi to shop and stay in hotels and buy meals in restaurants. [central bank digital currency] very soon, in the coming year. “
The US is catching up. In late February 2021, Fed Chairman Jerome Powell said the US will engage with the public this year about the digital dollar.
Proponents argue that central bank digital currencies can facilitate cross-border transactions, promote financial inclusion, and provide stability to the payment system. There are also privacy and supervisory risks with government-issued digital currencies. And in times of economic uncertainty, people are more likely to get their money from commercial banks, speeding up a bank run.
Watch the video above to find out how central bank digital currencies can become the future of global finance.