Every one should read this and think through. Where this is heading?
The Digital Currency Arms Race: Central Banks Enter The Fray To Protect National Sovereignty
October 18, 2020
Former member of Parliament and now a lobbyist for firms in financial services and other sectors
A group of seven central banks, including Canada’s, have issued a statement indicating they are working together on common principles and key features for a viable central bank digital currency, or CBDC.
The banks in Canada, Britain, the European Union, Japan, Switzerland, Sweden and the United States are getting serious about the threat that private digital currencies pose to the control of monetary policy. Just as importantly, the exclusion of China from the group signals that central banks are waking up to the threat to national sovereignty if they’re not in the official digital currency game or if China gets first-mover advantage.
Central banks have been monitoring the emergence of digital currencies (bitcoin, Facebook’s Libra and so on). But there is a new urgency because COVID-19 has accelerated the flight from cash. Private digital currencies are no longer a mere adjunct to normal “cash” transactions, but supplanting them. In Sweden, people using cash for their most recent purchases dropped to 13 per cent from 39 per cent 10 years ago. Experience differs from country to country, but the trend is clear.
Something else is now at play, however. Bank of Canada deputy governor Timothy Lane said it out loud. Official digital currencies can pose a strategic threat: “If one country introduces a central bank currency, then that immediately creates the potential for other countries to be affected … and that can create a whole other set of issues.” He likely has in mind China, where the People’s Bank of China is well down the road to going electronic.