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Countdown to Digital Money: 11 Things You Need to Know Now

May 14, 2021

Barry James, writing in The Fintech Times summarises key points to note regarding the imminent introduction of CDBC's to the mainstream. You can read the full article here.

"The 11 Things You Need to Know about ‘GovCoins’ (aka CBDCs) – the digital ¥ $ £ €…

  1. They are coming soon: around 4years in Europe, much sooner to most of China, the USA will trail behind. Internationally sooner too since the e-Yuan clearly has international ambitions and capability.
  2. There are many possible designs – ranging from those capable of centralised control and micro-management (even social control of groups or individuals) to those that preserve the anonymity of cash (or most of it) combining it with greater usefulness (friction and largely cost-free online, micropayments etc)
  3.  The most likely outcome is that a ‘balance’ will be struck by each country – the big questions are who will be in charge and will there be transparency of governance – which will be key.
  4.  The decisions are being formed and made right now – in Europe, the UK and in many central banks around the world. The ECB say that 86% of central banks have projects at one stage or another
  5.  Adoption is likely to be rapid, if not (at first) universal. These will be government backed coins or currency, and they’ll be available to everyone. They will be introduced in a way that is attractive, or that is helpful that is useful in various ways. 
  1.  They will bring universal suffrage to the financial system – banking the unbanked… Probably!
  2. This will likely bring a universal digital ID with them – as an option in the first instance – as the FT has pointed out.
  3. The outcome will affect everyone – and every kind of business. Just as widely available electronic payments have across China.
  4.  These ‘Govcoins’ such as the digital dollar and the ‘Britcoin’ (digital pound sterling) will be unlike BitCoin and other cryptocurrencies in nature: They will be government-backed, they will be ‘stable’ (in value – as stable the parent currency) and will be centrally controlled – at least to some extent
  5. Ownership could be vested with the state or (as now) effectively with the banking sector – or for the the first time in history with the people with a specific mandate for it’s operation and development to be for the public good. A key subject for debate.
  6. You may not be consulted: Short of a debate and democratic interventions the keys decisions will remain, as they are now, with bankers. Central banks, heavily influenced by their clients, the commercial banks."

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