The United States government aims to launch a central bank digital currency (CBDC) to digitize the dollar. A digital dollar may protect the nation’s security and facilitate cross-border transactions. The American CBDC will differ from other countries’ CBDCs as it would include other countries that use the dollar as their reserve currency.
Hello. I am Bobb Rousseau and this is Apostrophe Podcast. In today’s episode, I discuss the central bank’s digital currency approach and how it may help the United States keep its economic and geopolitical dominance of the global financial system.
First, let me explain what the Central Bank Digital Currency is and what it intends to accomplish.
Think how you use your money right now to purchase goods and services or to receive and send money; CBDC will not change that, except that the dollar will be digital. Your country’s central bank, not your traditional bank, will track and trace your record of transactions. Several countries have already launched their CBCD. Some examples include China’s Digital Yuan, the Bahamas’ Sand Dollar, and the Eastern Caribbean Central Bank’s DCash. Early adopters of CBDC see more efficient transactions, increased financial inclusion, and reduced costs associated with cash handling.
Digital currencies will neither replace cash nor will they compete with cryptocurrencies. The dollar will be digital does not mean it will be a cryptocurrency. So is because, compared to Bitcoin, Ethereum, and other cryptos, it will remain centralized as a central authority issues and regulates it. On the other hand, cryptocurrency is decentralized, without any governing body, giving users more control.
The United States is contemplating digitizing the dollar. It seeks to launch a central bank digital currency as a geopolitical and geostrategic approach to protect national security and facilitate cross-border transactions. The U.S. CBDC will be different from that of other countries in the sense it will include other countries that have the dollar as their reserve currency or use the dollar in global trade.
The American government contends that, with a CBDC, the federal reserve will be able to detect homegrown terrorist groups and their financiers as it will be able to track domestic transfers to know who sends money where and to whom. Presently, only commercial banks track consumer banking activities, and they are not required to share consumer information with any other entity, especially the government.
When the United States succeeds in rallying foreign central banks around one centralized financial platform where the digital dollar will be primacy in global trade, it will counter the rise of the BRICS countries seeking to launch a common digital currency or to further a Petro-Yuan deal.
In summary, the United States aims to launch a central bank digital currency (CBDC) to digitize the dollar. A digital dollar may protect the nation’s security and facilitate cross-border transactions. The American CBDC will differ from other countries’ CBDCs as it would include other countries that use the dollar as their reserve currency.