Is the Emergence of National Digital Currencies Inevitable?By Cinthya Alaniz Salazar | Fri, 10/15/2021 - 09:32
The state would subvert the traditional banking model under the proposed adoption of central bank digital currencies (CBDC), which would place the federal government as the intermediate of every single monetary transaction that would grant it an unprecedented control over citizens’ personal finances. It is “the newest danger cresting the public horizon” warns former CIA and NSA Whistleblower Edward Snowden in a self-published article.
Digital currencies are a perversion of cryptocurrencies “designed to deny its users the basic ownership of their money,” argues Snowden. Digital currencies already exist as an entry in a bank’s database and that these proposed currencies are not equivalent to paperback currency. What this currency really represents, he claims, is a financial tool that can be weaponized by the state to withhold funds and impose itself in every transaction, thus representing an encroachment on personal freedoms.
As of now there are only five countries with fully launched digital currencies, while another 15 are running pilot programs, including major economies like Sweden and South Korea according to data from the Atlantic Council. However, countries exploring CBDC now constitute 90 percent of the global GDP thereby pointing to the real plausibility of a global CBDC framework. This has prompted McKinsey consulting firm to encourage market players to prepare and position themselves for “inevitable changes on the horizon” saying:
“Within this continuum, we may see flavors determined by geography (for example, central banks such as China’s exerting greater influence through direct control of monetary policy), by market incumbency among private institutions (for example, e-commerce or social media giants in the US with potential to migrate some user transactions to stablecoins), or by sector.”
In this context it becomes obvious that Mexico is trailing behind on this apparent global transition, considering that the federal government has banned the use of cryptocurrencies altogether. However, as MBN reported last week, the Mexican Stock Exchange (BMV) has indeed taken note and is looking to for the necessary authorizations to list cryptocurrencies for trade. According to MBN Startup Contributor, Javier Martínez, Chief Product Officer of Bitso, “crypto-powered solutions can enable efficient, faster, and cheaper cross-border payments than traditional processes. This indicates that there is domestic interest, but federal ambivalence.”
Currently, there are too many unknowns but it is undoubtedly clear that CBDC frameworks should be crafted with privacy safeguards. Ultimately, it remains to be seen if this framework can incorporate such protections or what consequences they will have for the greater global populace, but they will unquestionably change the financial system.