Concerns on Central Bank Digital Currency’s Adverse Effects on Banks

In an interview with Defi Media, business attorney Me Penny Hack has lengthily explained the difference between cryptocurrency and Central Bank Digital Currency.

He also highlighted the implications of digital currency on our economic liberties and democratic values.

Cryptocurrency uses decentralised systems to verify and record digital transactions, whereas Central Bank Digital Currency is a digital currency issued by a central bank that’s tied to the official currency of the issuing country, and in Mauritius, the Bank of Mauritius (BoM) is responsible for supporting financial services, defining monetary policy, and issuing digital currency.

The BoM, he said, already possesses the legal framework to issue digital currency and could formulate regulations to govern digital transactions involving the BoM without any physical currency.

Hack revealed that the banks would be reduced to customer service representatives and that their current services would need to be reevaluated.

He also raised concerns as a cashless society may increase the government’s power over people’s money and could restrict monetary freedom.

“With the CBDC system in place, the state could have complete and arbitrary control over whom and how transactions are made.

The loss of privacy and potential misuse of CBDC by the government could compromise democratic values and liberties,” he said. 

Source: Defi Media