What is the Impact of Central Bank Digital Currencies (CBDCs)?
The CEO of the financial advisory firm deVere Group, Nigel Green, has stated that the rise of central bank digital currencies (CBDCs) will increase the popularity of cryptocurrencies.
Advantages of CBDCs and the Lack of Privacy
Green says CBDCs offer several benefits, including convenience, efficiency, and transparency. Still, they do not provide privacy to the users.
He believes that as more and more countries adopt these digital currencies, the case for cryptocurrencies such as Bitcoin will become stronger due to the privacy they offer. Green predicts governments will defend CBDCs against privacy criticism by dismissing these concerns as overblown.
However, he considers these assets a real privacy threat as they will give the government the ability to track spending in real time.
CBDCs as a game-changer in the financial system
Green states that CBDCs will change the financial system as they can track and trace every purchase and monitor every penny spent.
He points out that the state-backed, programmable digital currencies will give the government greater oversight of citizens’ transactions.
Investigation into the issuance of a CBDC in the UK
Green’s comments come after a recent announcement by the United Kingdom’s HM Treasury and the Bank of England that they are investigating the possibility of issuing a CBDC, with a decision expected within the decade.
The Chancellor of Exchequer, Jeremy Hunt, stated that while cash is still here to stay, a digital pound issued and backed by the Bank of England could be a trusted, accessible, and easy-to-use way to pay. The investigation aims to determine what is possible while also ensuring financial stability.