A released report on the Central Bank Digital Currency (CBDCs) by the Federal Reserve confirmed that the government is insecure because of more adoption of the other countries’ CBDCs.
The entry of the crypto and blockchain industry resulted in the birth of many things and still is giving birth to many other things which are not possible with traditional technology. In particular, blockchain-based technology Central Bank Digital Currency (CBDCs) is getting more traction than any other use case. Right now China is at top rank with its digital Yuan (Chinese CBDCs). The majority of the countries’ central banks believe that China will present its strongest dominance in the whole world with its Digital Yuan. This type of overthinking is giving a better push to all the Central banks to research and develop their own CBDCs.
Last Thursday, the Federal Reserve published its research whitepaper officially. Through the report, the government noted that the adoption of Central Bank Digital Currency (CBDCs) is a much better option for the citizens, in terms of a fast & efficient payment system but some flaws with it can ruin the financial system.
The report also noted that CBDC will give its financial system and services directly to the citizens and it will possibly eliminate the private banks and other financial institutions. But on the other hand, there is a need to balance every other thing in this system like privacy/transparency to fight against criminal activities.
“Any CBDC would need to strike an appropriate balance between safeguarding consumer privacy rights and affording the transparency necessary to deter criminal activity.”
On the other hand, besides the better payment system, Fed noted that no development work the on Digital dollar may result in a threat for dollar by other countries’ CBDCs Currencies.
“if these new CBDCs were more attractive than existing forms of the U.S dollar, global use of the dollar could decrease – and a U.S CBDC might help preserve the international role of the dollar.”
This report of Fed Res on CBDC is a clear indication that the US will develop its CBDCs but its use will be under huge restrictions, or we can say control on the Digital Dollar will be like a traditional financial system.