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How the Fed’s digital currency could displace crypto

Financial Times/Gillian Tett

Repost from 8-9-2021

graphic representation of a digitized dollar

“The Boston Fed and MIT are building a CBDC (central bank digital currency) from scratch that aims to usurp existing tokens.”

USAGOLD note:  It is a complicated matter to compare cryptocurrencies to a digital currency issued and managed by the Fed. Even more complicated to compare one or the other to gold. In the case of cryptocurrencies, the question becomes how much can be created by the many entities issuing the tokens, therefore, robbing the concept of its scarcity factor? In the case of a digital currency issued by the Fed, there is no question of scarcity. There is none. It will be no different than the fiat dollar in the quantity of its issuance. In fact, it is treated honestly by the issuing authorities, it will simply be tacked on to the overall money supply in the nation-state in which it is issued – or at least it should be. Tett’s editorial does not address these issues. Instead, it touches on some of the logistics of issuing a national token. She comes down, it seems, on the side of those who think that a national token would supplant the need for the private variety.

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