Back in March of 2022, President Joe Bozo issued an executive order directing the Office of Science and Technology Policy to prepare a report on the risks and benefits of creating a digital dollar for the United States of America
The digital dollar is referred to as a CBDC for short, meaning a central bank digital currency.
It would be a virtual version of the physical cash you carry in your wallet today or store in your mattress for emergencies, basically resembling a government-issued version of a cryptocurrency.
The executive order isn’t the only time the federal government has asked itself whether it is time for the U.S. to adopt a digital dollar.
Just a few months after the Bozo executive order, the New York Federal Reserve launched a multi-week program using simulated data to test a digital dollar.
Supporters of a CBDC say it can help make banking services cheaper, easier, and faster, while increasing financial inclusion by making financial services more accessible for all Americans.
They also argue a digital dollar could make it easier for the Federal Reserve to implement monetary policy.
However, critics argue that a digital dollar would generate major privacy concerns and hand over too much power to the federal government.
Afterall, that is what the “G” wants: complete control over We The People.
A U.S. adopted digital dollar would be a form of legal tender in the U.S. that could be used to purchase goods and services, and settle all and any outstanding debts.
But it would exist in virtual form only, stored and exchanged online via computer networks, never taking the physical form of paper banknotes or coins ever again.
Bitcoin which is managed by a decentralized network made up of tens of thousands of participants, the U.S. CBDC are highly centralized assets managed by governments and central banks.
It’s no surprise that more and more, the use of physical cash is being replaced by digital transactions, via credit cards, debit cards and payment apps.
However, transactions using digital dollars would be very different — that’s because a digital dollar would be a direct liability of the Federal Reserve, rather than a commercial bank or another financial institution.
In today’s U.S. financial system, people access their money via banks, each of which has its own distinct system for tracking payments and deposits.
As a result, transactions involving multiple banks can involve delays of one to three working days, since action is required from intermediary banks to ensure they are completed accurately.
With a digital dollar, there would most likely be a single, unified system for tracking payments and deposit, run by the Fed or another government entity.
It’s worth noting that the central bank has yet to commit to creating a CBDC in the first place, so the final form of a digital dollar system remains an open issue.
Presently the Fed is studying how a digital dollar could help expand consumer access to the financial system and support faster and cheaper payments.
A 2021 survey by the Federal Deposit Insurance Corporation found that 4.5% of U.S. households are “unbanked.”
That means no members of those households have a bank account and are likely living under the radar of the system.
Without a bank account, these Americans also do not have access to many digital payment systems, such as Apple Pay and Venmo, because those services require links to bank accounts.
Fed digital dollar accounts could be structured to have no fees and no minimum balances, potentially granting digital banking access to all Americans.
Payment companies charge fees each time a user completes a transaction.
Credit card users often don’t see those fees because the fees are paid by the merchants selling goods and services.
One of the potential advantages of a digital dollar could be to reduce or even eliminate transaction fees.
In addition, merchants don’t receive the money you pay in a credit card transaction immediately.
Actually, it typically takes a few business days for those payments to reach the merchant’s account.
In theory, a digital dollar would move all digital transactions to a single ledger, and payments from a federal account would clear instantly.
A digital dollar would be accepted everywhere that accepts the regular dollar, meaning there would be no need to determine if a company or person accepts a certain credit card or uses a certain payment app.
On the government’s side, a digital dollar could make it easier for the Fed to adjust monetary policy.
For example, the economic stimulus payments the government sent out during the COVID-19 pandemic could have been deposited into every American’s digital dollar accounts instantly.
In theory, the payments could have been easily tracked to reduce fraud and mistakes.
Critics of a digital dollar say it would hand too much power to the U.S. government.
They contend that it would open the door for the Federal Reserve to more tightly control how Americans spend and save their money.
The government could potentially restrict access to funds or credit, implement negative interest rates on cash, collect taxes automatically or eliminate physical cash entirely.
The government could also monitor digital transactions and collect data on Americans’ financial activities including but not limited to the purchase of firearms and ammo.
Many Fed officials like Fed Chair Jerome Powell have been noncommittal on a digital dollar.
But Fed Governor Michelle Bowman recently highlighted the risks involved in setting up a CBDC system. Those unbanked households say they simply don’t want a bank account or don’t trust banks.
The Fed is already addressing some of the problems of slow and costly transactions by launching the FedNow digital payments system, which was expected to go online in July 2023.
The goal of the FedNow system will be to facilitate low-cost bill payments, money transfers, paychecks, government disbursements and other consumer activities.
Essentially more government control and observation of where and how you’re spending your hard earned money.
I don’t know that there’s any way around this, it’s coming eventually. If you haven’t already noticed, the “G” desires to control every aspect of your life – slowly but surely eating away at your freedoms.
Can we change it? Not likely. Can we adjust to it? Of course.
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