Cryptocurrencies have continued to grow in popularity and for central banks to stay relevant, they are now issuing digital currencies.
Key Takeaways:
- Many fear CBDCs could give governments too much control over how people spend money. Is that paranoia or a justified concern?
- Previous CBDC launches around the world struggled due to distrust. What would it take for Europeans to accept a digital euro?
- If the ECB pulls this off, will countries like the U.S. and U.K. rush to launch their own CBDCs to avoid being left behind?
The European Central Bank (ECB) announced on 31 October that it plans to release the “digital euro” by 2029. Marking one of the biggest shifts in Europe’s financial system in decades. Supporters see innovation while critics see surveillance.
The announcement has elicited reactions from all quarters with many individuals saying they will not use it. Here’s what’s driving the move and why it’s sparking backlash across Europe.
Will the Digital Euro Give Governments More Control?
There is this long-standing belief that the digital version of a central bank currency is only a tool for control.
Referred to as programmable money, this digital euro for example can be programmed to allow certain use cases and not others.
Such control can be weaponized to enforce the will of the government over the people whether they make sense or not, many have argued.
The ECB president Christine Lagarde in the announcement said if approved, the digital euro pilot is expected in 2027 and full rollout across Europe in 2029.
Several other countries have rolled out central bank digital currencies (CBDCs) in a bid to take back control of the financial system from public cryptocurrencies such as Bitcoin, Ethereum, and the rest.
However, such attempts have so far been largely unsuccessful as the people don’t seem to trust the banks rolling out the currencies.
A Global Domino Effect for CBDCs?
The ECB is one of the most powerful central banks in the world and its influence can be far reaching.
Therefore if it succeeds in issuing a CBDC, many other central banks of top countries are likely to follow suit, leading to a race for launching CBDCs.
Whatever the case, it may take some real effort to either convince the people or coerce them to use the currencies since trust has been eroded.
Currently, most people would rather stick with cryptocurrencies that give them full control instead of a CBDC.
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- Robert Kiyosaki: Europe is Toast, Bitcoin’s the Only Safe Play
What do you think?
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