Can you imagine waking up one day and finding that cash had disappeared? Or that you were no longer allowed to pay with it? Or that its value was so insignificant that it had no value at all? This, which we have already seen in some first world economies not so long ago, could cease to be a crazy idea and become the new normal in a few years, when CBDCs, such as the digital euro, are fully operational.
En 'The Voices of Satoshi', the Bit2Me and Web3MBA podcast, discussed how CBDCs will affect the future of cash, and the conclusion was clear. You can see it in the following video.
There are several reasons why people believe that cash could disappear in the near future. Firstly, more and more people are using credit and debit cards, as well as mobile payment apps, to make purchases. According to a report by the US Federal Reserve, in 2019, only 26% of payments made in the United States were made in cash.
Cash is also expensive to produce and distribute. According to a report by the Bank for International Settlements, the annual cost of producing and distributing banknotes and coins worldwide exceeds $200,000 billion.
In this context, CBDCs could be a solution to replace cash. Some countries are already working on developing their own CBDCs. For example, China has launched its digital currency, the digital yuan, which is already being used in some cities in the country. Other countries, such as Sweden and Canada, are also studying the possibility of launching their own CBDCs.
CBDCs could have several benefits over cash. First, they could reduce the costs of producing and distributing money. Furthermore, they could improve transaction efficiency and reduce the risk of fraud and theft. They could also facilitate financial inclusion, allowing unbanked people to transact digitally.
However, the introduction of CBDCs also poses some challenges. For example, there could be concerns about the privacy and security of users’ personal data. There could also be concerns about financial stability and the influence of the central bank on the economy.
In conclusion, the potential end of cash is a trend that has been observed in many countries in recent years, and CBDCs could be a solution to replace it. Although CBDCs could have several benefits, they also pose challenges that need to be addressed to ensure their success and acceptance by users.
