Bitcoin Leaves Central Banks Little Choice but to Digitize Fiat Money

And now it appears to be only a matter of time before global central banks digitize national currencies.

China Takes Digital Lead

China got the ball rolling, with its central bank the PBOC reportedly pursuing the digitization of the country’s local currency, the yuan. Chinese officials tell local media outlet the South China Morning Post (SCMP) that they’re in no rush to launch a sovereign digital currency, as regulatory issues still must be hashed out. This after the PBOC hinted that China’s digital currency was right around the corner. Governor of the People’s Bank of China Yi Gang is quoted in SCMP as saying:

“If the [sovereign] digital currency involves cross-border use, it will involve a series of regulatory issues regarding anti-money-laundering, anti-terrorism financing, anti-tax evasion as well as know-your-client protocols.”

PBOC officials have suggested that the digitized version of the yuan would be legitimate and would eventually replace banknotes.

Is a Digital Dollar Next?

In the U.S., it’s a mixed bag. While Congress has made strides to usher in crypto-related legislation and embrace technology innovation, regulators have been moving at a snail’s pace while monetary policymakers have largely been in denial.

Nonetheless, policymakers were confronted with the inevitability of going digital recently when Congressman Bill Foster (D-IL) sent a letter to Fed Chairman Jerome Powell, urging the Fed to explore a digital dollar. Foster isn’t the only lawmaker pushing for change, as Congressman French Hill also penned the letter to Powell alongside Foster. Sheila Bair, who was previously at the helm of bank insurer the FDIC, also sees a central bank digital currency in the future.

The move toward the digitization of fiat currencies appears to be the next natural step in the evolution of money. Those who decline to embrace the trend will be left behind.