Great interest in cryptocurrencies and the Covid-19 pandemic has sparked a debate among central banks over whether to issue digital currencies.
China has been at the forefront of developing its own digital currency. He has been working on the initiative since 2014. Chinese central bank officials have already conducted major tests in major cities including Shenzhen, Chengdu and Hangzhou.
“China’s testing is on a very large scale,” said J. Christopher Giancarlo, former chairman of the U.S. Commodity Futures Trading Commission. “When the world arrives in Beijing next winter for the Winter Olympics, they are going to use the new digital renminbi to buy and stay in hotels and to buy food in restaurants. The world going to see action [central bank digital currency] very quickly, within the next year. “
The US is playing catch. In late February 2021, Fed Chairman Jerome Powell said the U.S. will be communicating with the public on the digital dollar this year.
Proponents argue that central bank digital currencies can facilitate cross-border transactions, promote financial inclusion and provide payment system stability. There are also privacy and audit risks with government-issued digital currencies. And in times of economic uncertainty, people may be more likely to withdraw their money from commercial banks, accelerating bank runs.
Watch the video above to find out how central bank digital currencies could be the future of global finance.