The intense interest in cryptocurrencies and the Covid-19 pandemic sparked a debate among central banks over whether they should issue their own digital currencies.
China is at the forefront of developing its own digital currency. It has been working on the initiative since 2014. Officials at the Chinese central bank have already carried out massive tests in major cities, including Shenzhen, Chengdu and Hangzhou.
“China’s experiment is on a very large scale,” said J. Christopher Giancarlo, former chairman of the United States Commodity Futures Trading Commission. “When the world arrives in Beijing next winter for the Winter Olympics, they will use the new digital renminbi to shop, stay in hotels and buy meals in restaurants. The world will see a working [central bank digital currency] very soon, next year. “
The United States is trying to recover. In late February 2021, Fed Chairman Jerome Powell said the United States will engage with the public about the digital dollar this year.
Supporters say the central bank’s digital currencies can facilitate international transactions, promote financial inclusion and provide stability to the payment system. There are also privacy and surveillance risks with digital currencies issued by the government. And in times of economic uncertainty, people may be more likely to withdraw their funds from commercial banks, accelerating a rush to banks.
Watch the video above to find out how central bank digital currencies can become the future of global finance.