In the future, whether sooner or later We will have to use digital currency. If it is really used, what advantages or disadvantages will there be for users like us?
CBDC (Central Bank Digital Currency) is a digital currency issued by the central banks of each country. And it is backed up with 100 percent of that country’s currency that can be used by users. It is no different from the currency that we use in the form of banknotes and coins, but only digitally on the blockchain instead. This will greatly reduce the cost of managing cash. which in Thailand itself has begun to test “Digital baht” at the end of 2022.
To make it clearer, it is similar to stablecoins issued by other organizations or companies. But it is more stable because today’s financial system reflects its value. And the government, as a mediator, has a policy that can control stability like every other currency that we use. As a result, it gains confidence and becomes more reliable.
First: privacy, although the CBCD has the idea of using blockchain to help create digital currency. But if there were an intermediary taking control, it may have cost the user’s privacy. in which the state will be able to access all transactions If we do not use it in the wrong way, there is no need to worry.
If we illegally do something wrong. The state has the power to suspend the account’s right to use the system. We may be legally disqualified by the state and unable to use financial products. It will make us unable to do anything. Because enforcing the CBDC would mean we would have to digitize our existing cash. The controls are therefore much easier.
Second, the bank will become less important. because we do not need to rely on the bank to transfer money or pay for water to the auntie’s shop next door or uncle ice cream because it can be done through the application of the state. Consumers have more bargaining power in terms of their spending choices. But in terms of depositing money, we should still deposit the money with the bank. Because converting cash to CBDC is just a change in the form of money. Not about earning interest or have a return.
Third, security: having the government as an intermediary. The result is stability. Having a central bank in fully control of the system. Unlike stablecoins where we have to trust the companies that make stablecoins.
Anyway, about the upcoming CBDC. The author sees it as having advantages over cash. Because nowadays we are able to connect to each other anywhere. Therefore, if we go abroad, the need to exchange money from one currency to another will disappear. Because we are able to do this easily through a single mobile device. which will be faster, reduce the loss on the exchange rate and fees can go down.