There is talk all over the Internet and social media about the Federal Reserve's push to issue a central bank digital currency, otherwise known as CBDC. The idea is to update an antique banking system to a new technology-based format. The main sell is the speed at which banking could be accomplished around the world. With the current system, it takes from three to 10 business days to clear a check from one bank to another, but the new system would allow this to happen within seconds, no matter the bank's location. This sounds great and could be a very big advantage, for the world and banking as a whole. But what do we really know about this new desired system? What exactly is central bank digital currency?
The Federal Reserve defines CBDCs as “a digital form of central bank money that is widely available to the general public.” That sounds acceptable but isn’t that what we already have with electronic bank deposits and withdrawals, done on our phones and through various apps such as ACH, Venmo, Zelle, and Paypal? With these already in place and working, why something else? What will be different?
For starters, one key difference from the current forms of digital cash in a bank account or payment app is that the CBDC currency would be a liability of the Fed and not commercial banks — hence the “central bank currency.” This means the Federal Reserve will own the currency and have even more power and control than they currently have. Something most anyone who understands commerce knows is not a good idea. It would also mean the actual US dollar would be available only in digital form, not an investment in a cryptocurrency or a holding in your PayPal. Meaning the desired digital currency will be 100% electronic, never able to be transformed into a physical paper product, like the dollar, euro, pound, or yuan.
Simply put, what differentiates digital currency from the electronic currency already in Americans’ bank accounts is that digital currency cannot and will never take physical form. And herein lies the problem that Freedom-4-All has with CBDCs. This really makes CBDC a “digital software program disguised as money, under control of one super-entity, that would and could be controlled by that entity.” This would allow the Fed 100% transparency of where every dollar you and I spend. That has a very strong potential which could bring a lot of pain and heartache, and the main fear CBDC brings to the table.