By OXShare
Once again, it is necessary to check the mailbox for inquiries regarding a digital form of currency issued by the Federal Reserve in the United States. Although the subject may not be widely known, there is growing concern surrounding it, hence it calls for further examination.
Government Control?
There is a worry that if a digital dollar is implemented, financial privacy would be compromised. This means that the government would have the ability to monitor individuals’ spending habits, shut down their bank accounts, or potentially seize their funds. Essentially, the concern is that a digital dollar would provide the government with another means to exercise control over our finances and freedoms.
There is sufficient truth in all of this, creating an intriguing narrative. However, there is no immediate cause for concern and it is highly probable that there won’t be any long-term implications. To comprehend why, we must analyze central banks and digital currencies, which are the two essential aspects.
Official Tender
The central bank plays a crucial role in this matter as it is responsible for issuing any currency. Unlike bitcoin and other cryptocurrencies, a central bank digital currency would be recognized as official legal tender, with the central bank providing support for it. This means it would be similar to existing currencies like the dollar.
In the United States, if the Federal Reserve were to introduce a digital form of currency, it would be very similar to physical cash and could be used interchangeably. The value of the digital dollar would remain constant, as it would be created and regulated by the same government entity. Just like the paper currency in your wallet, a digital dollar would still be considered a dollar. It’s important to note that this concept does not apply to cryptocurrencies like Bitcoin, as the intention is specifically focused on a digital currency issued by a centralized bank. Therefore, the involvement of a central bank is what gives the currency its official status. This situation is considered to be quite normal and in line with standard currency systems.
Digital Already the Norm
However, what about the digital aspect? It is already common. We currently use digital dollars frequently without realizing it. When was the last time you paid your credit card bill in cash? Even using a credit card itself is a digital transaction. Banks do not have physical cash in their vaults, but instead, they have digital accounts with the Federal Reserve. In various ways, we already have digital dollars issued by the central bank.
When to Worry
Where do the concerns originate from? The present circumstances already provide less privacy compared to what we had in the past, and it potentially could worsen with the increased digitization. Currently, we may be fine, but the tendencies are negative. As previously mentioned, there is reasonable cause for these worries. How will we determine when it’s appropriate to be concerned?
There are a few factors that provide us with privacy currently. If these factors become jeopardized, we should be worried. Firstly, the existence of cash provides a level of privacy. If cash is eradicated, all transactions would become digital and thus easily traceable. Therefore, the elimination of cash would raise concerns. Secondly, if the government had direct visibility and control over individual accounts, such as if the Federal Reserve permitted or obligated individuals to open accounts directly with them instead of a bank, it would create opportunities for potential misuse. The potential for issues exists in this scenario.
However, these are factors to be vigilant about and not immediate worries. As long as there is enough cash accessible, the possibility of being monitored can be evaded. As long as privately owned banks remain independent, we will have the ability to maintain a certain level of detachment from the government. Although the present system has flaws, it inherently includes a certain amount of privacy and autonomy. This is what people are concerned about potentially sacrificing.
Keep Calm and Carry On
Currently, that is not occurring. The banking system is still fairly strong and cash is still accessible. I will only start to be concerned about the possible negative implications of a digital currency issued by a central bank when this situation changes. However, for now, we essentially have a digital currency with no additional issues than what is normal.