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- The agency asked for feedback from the citizens regarding the digital Dollar.
- 11 countries have already launched Central Bank Digital Currencies.
The Federal Reserve released a paper on how the concept of Central Bank Digital Currency (CBDC) can be used in the U.S. Recently, the agency asked for feedback from the citizens regarding the digital Dollar, resulting in a mixed reaction from the population. While some are in favor, while a few have concerns about how it can impact negatively to the people.
People Are Still Skeptical Over CBDC
Digital Dollar may render it easier for citizens to execute transactions, still some believe that cash must always be an option. In case of a potential outage or anything, cash would be the ultimate savior. Moreover, people are also concerned about their privacy and believe that CBDC implementation could lead the government to control every aspect of their lives.
Another comment says that this could be a bad idea as it can potentially affect the poverty stricken population. A majority of them cannot afford a smartphone. According to the Bureau of the Census, there were around 37.9 Million people living below poverty in the US during 2021.
A citizen suggests lower transaction fees if the technology is implemented. This comes following the fact that digital assets including Bitcoin (BTC), Ethereum (ETH) and more have seen extremely volatile times, resulting in several financial blows. Some believe CBDCs would lead to heavy energy consumption considering blockchain will be its underlying technology.
Blockchain technology is usually associated with extreme power consumption, though only proof-of-work crypto assets like Bitcoin allegedly leads to greenhouse gas emissions. Data shows that BTC blockchain estimatedly consumes around 127 terawatt per hour a year. Additionally, crypto activities are believed to emit 25 to 50 Million tons of carbon-di-oxide in the environment annually.
CBDCs also pose a threat to the banking system. A feedback by a citizen highlights that governments could replace the banks. Furthermore, digital Dollars may not provide aid to privacy concerns. A comment says that bank records could easily be pulled via a court order.
Nations are constantly experimenting with Central Bank Digital Currencies globally. Recently, China’s Changshu city announced that all civil servants will get a salary in digital Yuan starting May 2023. Previously, the country gave away $26.5 Million worth of Digital Yuan to drive countrywide adoption.
In the U.S., idea of digital Dollar met with a backlash. Vivek Ramaswamy, a presidential candidate for the United States, believes that implementing CBDCs would make the nation similar to China as it may pave a path to a social credit system. Meanwhile CBDC supporters think it can help maintain Dollar’s dominance globally.
Ron DeSantis, Governor of Florida, says that “unaccountable institutions cannot implement CBDCs on the US population as CBDC won’t be abused.” The Fed has also clarified their stance on the technology. The agency previously said that it will not issue digital Dollar without the support of Congress.
According to the Atlantic Council data, 11 countries have already released CBDCs while 18 have launched pilot programs. While several other countries are making moves to implement the concept, they need to identify all the challenges before providing their citizens with something that may not come with flying colors.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
