2019 will go down as the year when the world went digital currency crazy. Not crypto crazy (that was 2017), but crazy for issuing national and corporate digital coins. Facebook. China. Canada. Thailand. The list of countries and companies experimenting with digital currencies is long and incongruous.
On the surface, entities such as Facebook and the Chinese government could scarcely be more removed from one another, and yet both are doggedly pursuing digital currencies that are, to all intents and purposes, virtually indistinguishable.
Some countries are openly pursuing central bank digital currencies (CBDCs), while others are exploring the possibility. Other nations known to be investigating the matter are Uruguay, Sweden, and India, which has tabled the notion of a digital rupee in its draft bill on cryptocurrencies.
While the nations that have disclosed they are working on digital currencies have caught the headlines, what’s more telling is the ones that have remained silent. Experts believe many more nation-states are secretly developing their own digital currencies, stablecoins, and CBDCs, threatening an impending currency war that could usurp the US dollar’s hegemony.
Regardless of how that narrative plays out, this much is clear: national digital currencies are not suited to serving as a universal global currency. Nor are they capable of fixing the shortcomings of privately issued stablecoins.