Cryptocurrency vs CBDC - Which will survive in the Future?

The future of Central Bank Digital Currencies (CBDCs) in the aftermath of the cryptocurrency market's rise and subsequent decline. It highlights that while CBDCs may not bring a revolutionary change, they offer potential for an improved financial world.

CBDCs, direct liabilities of sovereign nations similar to traditional money but with electronic convenience, could enhance financial inclusivity and efficiency. However, their success depends on various factors. They may not gain traction in regions with robust banking systems or among people satisfied with existing financial tools. Concerns about government surveillance of transactions also pose challenges.

The impact of CBDCs hinges on a country's financial landscape and the design of these currencies. In less developed financial systems with unbanked populations, CBDCs could make a significant difference. Moreover, enabling faster, safer, and cheaper cross-border payments remains a vital potential advantage.

The proper CBDC design is crucial, emphasizing the need for global regulatory principles similar to those established for market infrastructure post the 2008 financial crisis. It also advocates for standardizing cross-border CBDC payments through the Bank for International Settlements (BIS).

The author urges leadership from countries like the United States in embracing CBDCs to realize their full potential. While acknowledging efforts by the US Federal Reserve in internal payment system upgrades, the article suggests greater focus on developing a US CBDC.

Ultimately, an appropriately developed and managed CBDCs have the potential to enhance national payment systems and improve the global financial landscape for individuals worldwide.