Digital currencies are making headlines. China, the United Kingdom, and other major countries are researching, and in China’s case, introducing their forms of digital currency in the form of central bank digital currencies (CBDCs). Despite China’s recent ban on using cryptocurrencies as a means of payment, cryptocurrencies are rising. Where does the United States fit into all of this, and can it even catch up to the field?
In an interview with CNBC earlier today, Michael Greenwald of Tiedemann Advisors, a former Treasury official, shared his thoughts on the situation. He said that the United States requires a digital dollar to succeed in the race for the future of currency.
He believed that the Covid situation had accelerated governments’ push for central bank digital currencies. He was concerned that the US would stay on the sidelines as Bitcoin and the digital yuan dominated payments.
When asked about security concerns about the United States falling behind, Greenwald stated:
“I think that the Chinese with the digital yuan could go outside of Swift, which would be very difficult for US sanctions.”
He explained how the Chinese CBDC could operate, saying that if it could go global, OPEC could use it, Swift could integrate with it, and central banks were holding dollars could convert to digital yuan.
Greenwald was asked to differentiate CBDCs from cryptocurrencies such as Bitcoin and Ether. He responded:
“A central bank is not decentralized, and ultimately a central bank would be able to have oversight over them [CBDCs], and it would be backed by that country’s currency, so ultimately the United States would need to work with their allies in the UK for the digital pound and the yen, and elsewhere, where Ether and other cryptocurrencies would operate outside of central bank control.”
The future of capital seems to be in jeopardy. On the one side, we have these governments competing for ownership of their currency, and in the case of China and the United States, competing for the larger prize of a single global currency.
On the other hand, some cryptocurrencies are decentralized and not under the influence of the government. Some may refer to it as “the people’s currency.”
The future of money will be determined in the coming years, and the stakes are extremely high. The global currency’s centralization or decentralization will undoubtedly affect how we go about our everyday lives in the future.