Communications from central banks about their plans to create fiat digital currencies seemed to respond to Facebook’s Libra project. Beyond the political dimension and supervision, “other” forms of money aim to reduce the effects of globalization.

Read also part 1: Digital currencies: a response to the crisis?

In Europe and in more isolated countries

In Europe, the potential for substitution between a CBDC issued by the ESCB and existing forms of the currency seems limited. With a high banking rate, and the possibility of using electronic payment methods (cards, SCT, SDD) at the sub-regional level, the MDBC could make it possible to offer the equivalent of wallets (Lydia, etc. .) on a European scale.   

For countries with low banking rates, MDBCs would offer a central bank digital currency as a substitute for the private electronic money widely issued at this stage by mobile phone operators and Fintechs, without interoperability. In Africa, for example, this currency issued (and guaranteed) by the central bank would be de facto interoperable. 

The case of the United States 

This is also the case of the United States. The $2 trillion “coronavirus bill” contained in the initial version carried by the Democrats the mention of a “digital dollar” to distribute government aid to small and medium-sized businesses. In view of the considerable amount of aid planned to support small businesses, the mention has been talked about. But the finally voted version of the House coronavirus package  no longer mentions it. Beyond the discussions still underway within the Federal Reserve, the delay in implementing such a solution in the emergency context is prohibitive. 

See also  Digital currencies: a response to the crisis?

Whether it is a central bank currency or a public “Venmo”, an “inclusive value ledger” on a free public savings and payment platform as mentioned in a proposed New York State law, it is a question of offering electronic money backed by the central bank and accessible to as many people as possible than only American residents with a bank account. 

A possible solution for other scenarios

Beyond the – legitimate – debate on the nature of digital money, it represents a significant interest – and therefore a market – for a number of scenarios that are not covered by existing forms. 

  • Accessibility: there is no doubt a business case for people who are not or poorly banked, as circular economies aim to retain value within them. But to respond correctly, the solutions for managing these digital currencies must make it accessible at the level of the individual, in rural or remote areas. There also where today only cash circulates. 
  • It is also necessary to develop the acceptance (the beneficiary, the merchant) of any new digital currency and not focus solely on the issue. It’s about getting the new currency (even CBDC) accepted by local populations who don’t trust the state system – even less in a system that would come from outside – and forget about the geek-attitude. 

Digital currencies can be a significant solution for the poorest and least educated; the very people who rely on cash and are the most vulnerable to upheavals, particularly climatic, are those who have the least access to smartphones and electricity and have the weakest connectivity. 

Nichi, an honorable representative from the Kalinagos (Dominica) recently called me to order: ”  Your discussions on the theoretical and technological characteristics that the means of payment to be implemented in our territories should include, seemed very intelligent to me, but I I didn’t understand anything. Don’t forget our need: I get up in the morning to go cultivate my land to feed my family, I need a simple, effective and concrete solution that takes our environment into account. »

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