A Royal Bank of Canada(RBC) analyst explored the potential for a digital dollar and concluded we’re unlikely to see a U.S. central bank digital currency (CBDC) any time soon. His rationale is that the risks outweigh the potential upside. It also points to the likely politicization of the central bank.
A CBDC can offer real benefits, with RBC splitting these into primary and secondary order ones. One major advantage is lower costs and expanding access to payment services, with five percent of the U.S. population currently without a bank account. For larger corporates, there’s also the benefit of reducing transaction times which minimizes counterparty risk. These are the only two that RBC considers as first order advantages.
The author does not view the digital nature of a CBDC as the major differentiator. Rather it is the recording of ownership that is distinctive, particularly regarding privacy. With cash, there isn’t a transaction record. But even for electronic payments, banks only have full details of one side of the transaction.
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