Central banks are headed toward digital currencies

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The U.S. is starting a national conversation around a central bank digital currency (CBDC).

Why it matters: Several other countries have already experimented with or released early versions of CBDCs. Such a pivot could aid underbanked populations, and help make banking and monetary policy more efficient.


Driving the news: The Senate Banking Committee held a hearing on CBDC Wednesday, led by Sen. Elizabeth Warren (D-Mass.). 

  • The Federal Reserve is set to release a discussion paper next month on how it’s thinking about a digital dollar.

How it would work: First, a CBDC is a digital version of the dollar, so its value wouldn’t fluctuate versus the dollar… since it is the dollar.

  • Put simply, a CBDC is just a digital version of an existing currency that is issued, governed and backed by a central bank.
  • CBDCs would be recognized as legal money, unlike bitcoin

The pros: It would enable more people to become part of the banking system, reduce the cost to bank and increase the rate of payments innovation.

  • The Federal Reserve could also gain more precision over money supply, and lawmakers could distribute government assistance programs such as social security and food stamps to a wider underserved group of the country. 
  • A U.S. CBDC could also help maintain the global predominance of the dollar.

The cons: Potential drawbacks include the traceability of digital payments. The anonymity of cash offers privacy.

  • Security of financial data on hundreds of millions of people will not come easy. 
  • Financial institutions are also fearful banks could lose a large proportion of their deposit base. 

What they’re saying: “CBDCs are ultimately quite likely for many countries,” Darrell Duffie, of Stanford’s Graduate School of Business, tells Axios. Duffie was a witness at the Senate hearing.

  • “I’m not confident that they are actually necessary — that needs to be judged based on the best CBDC designs that will emerge,” Duffie adds.

State of play: More than 60 central banks have been looking into CBDCs since 2014, according to a PwC report from April.

  • The Bahamas and Mainland China have active trials dubbed, the “Sand Dollar” and the “Digital Yuan,” respectively, that individuals can use as a form of digital cash.
  • The Federal Reserve has been researching digital currencies since at least 2018, but at a less consistent pace compared to other central banks reviewed by PwC. 

Be smart: While there is general agreement about what a CBDC is, countries are faced with hundreds of choices and decisions with respect to how they build their systems — and, in turn, what the long-term implications will be.

  • So far, most observers have assumed that CBDCs will be account-based, rather than being token-based like most existing cryptocurrencies.

What to watch: Lev Menand of Columbia Law School, who also testified, tells Axios he believes the pandemic highlighted the inequities and inefficiencies of current payments system.

  • “It took far too long to distribute critical economic aid in April and May of last year,” says Menand.
  • Some experts also say that criminals may have stolen as much as $400 billion of unemployment benefits, Axios’ chief financial correspondent Felix Salmon reported.

Felix’s thought bubble: “Digital currencies are still in their infancy, despite bitcoin being 10 years old. I wouldn’t expect to see a U.S. CBDC this decade.”

Go deeper on the threat that CBDCs pose to digital stablecoins.

The article ‘ Central banks are headed toward digital currencies ‘ Previously Appeared on: https://www.axios.com/cbdc-us-fed-central-bank-digital-currency-china-yuan-10adb535-adf1-4af5-82f5-68155e0c1ae1.html

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On the web, pop-up windows are often considered a nuisance. But sometimes, you need to enable pop-ups in Microsoft Edge for certain websites to work properly. Luckily, it’s easy to allow pop-ups on all sites or only specific sites in Edge for Windows 10 or Mac. Here’s how.

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The article ‘ How to Allow Pop-Ups in Microsoft Edge ‘ Previously Appeared on: https://www.howtogeek.com/732439/how-to-allow-pop-ups-in-microsoft-edge/

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post-to-instagram-featured.jpg Instagram provides a bunch of cool ways to share and create content on the platform, but do you know you can directly upload videos to Instagram from your PC? Most users edit their videos on their PCs, as it provides more options and ease of use than editing on a mobile phone. Using the methods mentioned in this post, you can directly upload those videos to Instagram from your PC. Before we begin … There are some Instagram video rules you need to adhere to in order to successfully upload your video. The preferred format… Read more14536250.gif

The article ‘ How to Upload Videos to Instagram From Your PC ‘ Previously Appeared on: https://feeds.maketecheasier.com/link/12555/14536250/upload-videos-to-instagram-from-pc

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