The Central Banks seek to integrate into the CBDC (Digital Currency of the Central Banks) some elements of the cryptocurrencies extracted from the Bitcoin White Paper that was published in 2008 to improve the monetary exchange.
Although this book was and continues to be a source of inspiration for the CBDC the truth is that there is a marked point of difference and that is that these digital currencies do not respond to the main characteristics of cryptocurrencies of being “open and resistant to censorship”explained Ruben Merre, founder and executive director of NGRAVE in the information sent to Cointelegraph Español.
On the contrary, what banking institutions seek is to add to the CBDC operating system those components that can contribute to enhancing their privacy and control.
“Although CBDCs promise some clear benefits – simplifying financial interaction with the government – they threaten a new form of information tyranny, described as money surveillance.” Mere explained.
Digital assets since their appearance have brought with them new forms of financial exchange where they offer a system in which there is no central authority, a monetary policy based on rules, with the purpose of settlement, without permissions, without borders and resistant to censorship.
And just as this operation has caught the attention of many users, institutions and companies, it has also caused the opposite effect in different entities. While on the side ofhe Central Banks, they have chosen to join the financial advance and create CBDCs with certain characteristics in common with cryptocurrencies in order to defend their original foundations on which money was built.
One conclusion that has been reached is that just as the world evolves, money also evolves with it, or at least its operating systems have, however, In the case of the CBDC, the Central Banks, although they bet on an evolution as mentioned above, they do not do it in a totalitarian way.
But, on the contrary, they continue working to continue having in their hands the power and control of citizens’ money as well as the privacy and freedom that they may want to have over their money.
A Central Bank Digital Currency (CBDC) is the fully digital form of an existing national currency, according to Merre, the clarification and emphasis is made that it is “completely digital” Since fiduciary money exists in physical form, it also exists in digital form, therefore, CBDCs do not share the physical side with national money.
The main objective of the CBDC is to change, hand in hand with the blockchain technology with which digital assets are managed, the way of managing money. According to ReubenHow a CBDC works is to replace that cumbersome financial bureaucracy with a cryptocurrency-inspired, ledger-based money management system that can connect all levels of the financial system down to the individual citizen who owns a digital wallet.” .
It is well known that the registry of cryptocurrencies is completely transparent and can be accessed with an internet connection to any transaction and with a Node the user can participate without any type of obstacle and even avoid censorship.
And this is exactly what the Central Banks do not want to happen because they are not willing to show their accounting books and records in a network as infinite as the Internet.t where anyone can access said information, therefore, what they seek to copy is the benefits of blockchain technology for exchange and implement it but with permissions involved.
Some of the benefits that the implementation of CBDCs can bring are: “allow a much simpler and cheaper way to provide financial benefits, with the ability to support microtransactions” which would directly help developing economies; “simplify the processing of tax payments” and finally, “reduce tax evasion”. This was detailed by Ruben Merre.
But just as there is the positive side, there is also the negative that should not be left aside and on the contrary must also be analyzed and kept in mind.
The fact that a digital currency can be easily moved between governments and citizens through the accounting record of a central bank can cause some risks that harm the user.
One of them is that by making use of a digital wallet enabled by Central Banks to store and carry out CBDC transactions, the user’s balance will be an entry to the accounting record that will be visible since it is not resistant to censorship and access will be authorized. So that, It will be totally controlled by the bank and just as it can increase said balance in the form of profit, it can also remove it. In addition to allowing you access to “privileged partiesMerre said.
Another negative factor is that taxes can be deducted for defects, which means that, to the user “it would force him to plead against any subsequent miscalculation. Tickets for speeding or parking, service fees to your town hall, could be made without notice.” Reuben explained.
Likewise, Ruben Merre also mentions that in the event of a financial crisis, Central Banks focus on carrying out “internal bailouts” and not external then making users pay through taxes and austerity the possible debts and liquidity that they may take at that time of crisis.
However, the current reality of CBDCs is that their future is not yet fully defined and, on the contrary, large and reliable organizations such as the FED are still waiting to give their position on the matter.
This is due to the fact that the US is undergoing a transformation in the financial system that has brought some complications that do not go unnoticed, such as the alteration of traditional positions in both the public and private sectors.
According to Reuben, “Until the FED shares a more concrete vision of what the possible launch of a CBDC would look like, the details and the future of the currency remain unknown. Of course, executives and analysts do not fail to mention that the Federal Reserve would act as the only counterparty of a US CBDC, and therefore the digital fiduciary currency would not imply liquidity or credit risk.
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