Once again this year, we would like to sweeten the Advent season for our readers with an Advent calendar. In a slightly different form, each door contains a “knowledge bomb”, which will be supplemented with an extraordinary special prize on Christmas Day.
Behind the twenty-third door is the term “CBDC”. To enter the giveaway on the 24th, simply take part in the polls and like the respective Twitter posts.
CBDC
Since 2021, various national banks have been considering issuing central bank digital currencies (CBDC). What was initially touted as wholesale, i.e., digital exchanges between banks, was trending more toward retail, which involves people’s individual payments, in 2022.
The Federal Reserve released a discussion paper in January in which the central bank defined a CBDC as a “digital liability of the Federal Reserve.” This should further be available to the public. Primarily, the threat of foreign CBDCs, such as the digital yuan introduced in China, is seen as a threat to the dominance of the dollar. Therefore, the research of a CBDC is urgently needed.
These CBDCs will not be open, borderless and neutral, nor will they be censorship-resistant or even immutable. Once introduced, they will not bring more freedom to the people, but will fight the last 10% of cash circulating in our economies. The international initiative was triggered by the Chinese central bank after all.
In the White House’s recently released digital asset framework, reports from several federal agencies have granted the Federal Reserve the ability to conduct ongoing research, testing, and evaluation of CBDCs. This ongoing process comes at a time when China is ramping up efforts to improve the dissemination of its e-CNY CBDC and has launched trials in various new provinces.
