Ask HN: Why do we need central bank digital currency (CBDC)?
Many countries', including the United States, central banks are trying to figure out Central Bank Digital Currency (CDBC). This move has accelerated after China introduced its digital currency (e-CNY).
But why do we need a digital currency when most of my transactions (presumably true for most people in a modern economy) is digital? I receive my salary via a bank transfer, make payments in grocery stores via credit cards, deposit checks via my phone by taking pictures of them, and split restaurant bills via Zelle. All that is digital - no cash is involved.
Explain to me like I am 5 - What problem does a digital currency solve that is not solved by electronic (digital) transfer mechanisms of existing fiat money?
Links
- US Federal Reserve working paper on CDBC https://www.federalreserve.gov/central-bank-digital-currency.htm
- European Central Bank on digital currency https://www.ecb.europa.eu/paym/digital_euro/html/index.en.html
- Details on Chinese e-CNY https://en.wikipedia.org/wiki/Digital_renminbi
But why do we need a digital currency when most of my transactions (presumably true for most people in a modern economy) is digital? I receive my salary via a bank transfer, make payments in grocery stores via credit cards, deposit checks via my phone by taking pictures of them, and split restaurant bills via Zelle. All that is digital - no cash is involved. Explain to me like I am 5 - What problem does a digital currency solve that is not solved by electronic (digital) transfer mechanisms of existing fiat money?
Links - US Federal Reserve working paper on CDBC https://www.federalreserve.gov/central-bank-digital-currency.htm - European Central Bank on digital currency https://www.ecb.europa.eu/paym/digital_euro/html/index.en.html - Details on Chinese e-CNY https://en.wikipedia.org/wiki/Digital_renminbi