A Government-Suitable Digital Currency (CBDC vs. StableCoin)

[Jatiluhung]

Almost all countries, especially central banks globally, are busy with preparations for digital currencies issued by central banks. In fact, according to a survey by the Bank for International Settlements, almost 90% of central banks are heading towards Digital Currency and some have even been piloted.

However, regarding the chosen digital currency, it turns out that there are various kinds of different responses from each country. Some prefer privately issued Tokens such as USDT, USDC and others which we usually call Stablecoins. For example, the Governor of the Australian Central Bank Prefers Privately Issued Tokens Over CBDC.
and the CEO of the Hong Kong Monetary Authority, Eddie Yue, also agrees with the opinion of the Governor of the Central Bank of Australia, Phillip Lowe, who says that regulated Private Tokens (Stablecoins) are better than Central Bank Digital Currencies (CBDC). this was expressed directly by Philip Lowe at the G20 Event. perhaps there are many from other countries who agree with Philip Lowe. (Note: The G20 is a multilateral cooperation forum consisting of 19 major countries and the European Union (EU). The G20 represents more than 60 percent of the world's population, 75 percent of global trade and 80 percent of the world's GDP.

however disaster that befell TerraUSD may be a consideration and influence the choices of various countries when deciding between a stablecoin or a CBDC.

what is your view regarding this issue. If you as a citizen of a country are given the opportunity or are invited to choose which digital currency your country will use, which one would you prefer between Stablecoin and CBDC?

_{Reference sources news and images :
https://beincrypto.com/
https://nocash.ro/cbdc-and-stablecoins-early-coexistence-on-an-uncertain-road/}

[348Judah]

what is your view regarding this issue. If you as a citizen of a country are given the opportunity or are invited to choose which digital currency your country will use, which one would you prefer between Stablecoin and CBDC?

As a matter of fact I would have love to prefer bitcoin but since your question is between stablecoin and CBDC then stablecoin will be a better option to take because it wont be affected or devalued by inflation with time of which CBDC does

[hugeblack]

It seems that you have confused two concepts, the first of which are stablecoins and the second digital currencies (CBDC,) stablecoina are nothing but a fixation in trading and then expanded their use outside the trading platforms, but they do not represent anything of value outside the blockchain model and therefore countries or governments cannot adopt them.

Digital currencies are a representation of the monetary system in a complete digital form, independent of commercial banks, meaning that the one who controls these currencies is the central bank directly and not through intermediaries (banking applications and banking services) as is happening now.

[_act_]

Stable coins are not CBDCs.

Stable coins are private but centralized, CBDCs are created by the government but they are both centralized.

Stable coins like tether can be freezed on noncustodial wallet, that makes it not to represent freedom just like fiat and CBDCs.

Because of these, I will prefer CBDCs because stable coins are centralized and people have not completed control over it like tether.

Stable coins are not centralized and can be manipulated like UST.

[bitmover]

Stable coins are not CBDCs.

Stable coins are private but centralized, CBDCs are created by the government but they are both centralized.

Stable coins like tether can be freezed on noncustodial wallet, that makes it not to represent freedom just like fiat and CBDCs.

Because of these, I will prefer CBDCs because stable coins are centralized and people have not completed control over it like tether.

Stable coins are not centralized and can be manipulated like UST.

I can add that Stable Coins are not as centralized CBDCs will be.

All CBDCs will most likely be linked to your documents. You cannot make a pseudo anonymous transaction using CBDC, but you can using stable coins.

Stable coins run in a lot of different blockchains, so you can make trades in DEX and similar software without doing KYC, for example. You won't be able to do so in CBDC.

There will be a great surveillance over CBDC. It will be much similar to fiat.

[KingsDen]

The CBDC is a creation of the government and the digital version of the fiat. This means that anything that happens to the physical fiat is applicable to the CBDC.
On the other hand, stable coins like tether are creations as a result of the existence of the blockchain. And when not decentralized, it's difficult to be trusted.

If you save your money in CBDC and inflation hits your country, the value of your money will lose and even the stable coins aren't immune to inflation.
Well, since there is bitcoin, I can choose CBDC over other centralized stable coins.

[NeuroticFish]

I see CBDCs pretty much like government issued stable coins. But, like the stable coins differ one from another (look how "stable" was UST/Terra), I expect to see differences between CBDCs too.
Some may require KYC, some not.
Some will have mechanisms to lock/seize your funds from your own wallet, maybe some won't.
Clearly all tx will be watched, but that happens with your CC too.

I don't know yet whether I'll use CBDCs or not. After all, I do use CC now too, so...

[Furious 7]

In this case I prefer to say that CBDC is an upgrade form of fiat and it is clearly different from stable coins because even though stable coins are more centralized they are not representative of fiat.
We must distinguish this first because indeed when we say that this is a unit then it is clear that this is something that I think is wrong.

[davis196]

It seems that you have confused two concepts, the first of which are stablecoins and the second digital currencies (CBDC,) stablecoina are nothing but a fixation in trading and then expanded their use outside the trading platforms, but they do not represent anything of value outside the blockchain model and therefore countries or governments cannot adopt them.

Digital currencies are a representation of the monetary system in a complete digital form, independent of commercial banks, meaning that the one who controls these currencies is the central bank directly and not through intermediaries (banking applications and banking services) as is happening now.

I agree with your statement. CBDCs are designed to make the financial system more centralized by removing the middlemen-the banks and the financial service providers. Stablecoins on the other hand are simply adding an unnecessary middleman between fiat money and the customers.
The only purpose of stablecoins is to make cryptocurrency trading more convenient by adding a less volatile pseudo-financial asset.
What's the point of using a stablecoin that is backed by fiat money, when you could use fiat money directly? I believe that stablecoins have no other utility besides crypto trading.
With CBDCs we will borrow money directly from the central banks in the future. I'm not sure if this going to be good or bad. It definitely has pros and cons and we will need a more in-depth analysis.

[hugeblack]

Clearly all tx will be watched, but that happens with your CC too.

It is impossible for governments to hear this because it will make it easier for the opposition to track accounts and make sure that all the money is spent on the required items. It will also make it easier for the enemies to estimate the defence budget, the economy, and then the attack will be easier, passing through the speculators in the stock exchange and food commodities, who will make a lot of profits by knowing the economic situation for the government.

In short, it will be part of the system that is not trackable.

[NeuroticFish]

Clearly all tx will be watched, but that happens with your CC too.

It is impossible for governments to hear this because it will make it easier for the opposition to track accounts and make sure that all the money is spent on the required items. It will also make it easier for the enemies to estimate the defence budget, the economy, and then the attack will be easier, passing through the speculators in the stock exchange and food commodities, who will make a lot of profits by knowing the economic situation for the government.

In short, it will be part of the system that is not trackable.

I see it different: the system will be trackable, but the system will not be mandatory. Like now, not all payments are done with CC. Some are in cash, some are done as bank transfer and so on.
Even more: the system, although trackable, it won't be transparent. So only certain agencies will have access for the tracking information.

I see no risk for defense or other sensitive payments... (unless done by complete idiots, obviously).

[fiulpro]

Stable coins are not very different than CBDC but I do understand that incase, there would be any problem, if the market would go down, you cannot peg stable coins 1:1, did we forget what happened with the USDT ? The Central Banks Digital currencies would be able to hold a statue of being backed by something therefore I do think that, no matter what for trading purposes we can use CBDC's for sure because even right now when we are talking about privacy, there is none. Even right now you would have to submit all the documents and stuff and then you would be able to avail the exchange. Therefore it does not really differ.

[kryptqnick]

I haven't heard of it before, but I read more about the survey, it seems legit. While 90% is among the surveyed 81 banks, the number for global representation is two-thirds, considering of central banks consider CBDCs. Considerations, though, don't entail actual adoption. It can just be in terms of investigating pros and cons, perhaps experimenting with a limited launch. In any case, I don't think it's a big threat to the crypto market. As for stablecoins which aren't issued by banks, perhaps CBDCs can be a good competition to them.

[jaberwock]

What's the point of using a stablecoin that is backed by fiat money, when you could use fiat money directly? I believe that stablecoins have no other utility besides crypto trading.
With CBDCs we will borrow money directly from the central banks in the future. I'm not sure if this going to be good or bad. It definitely has pros and cons and we will need a more in-depth analysis.

You can't use fiat money online but if you are referring to the cbdc's, why not? As long as it will be in the mainstream where many platforms or services supports it but for now I will go for stable coins. Stable coins have many uses other than trading. You can use it for gambling, lending, staking, sending/receiving money, etc. In terms of borrowing maybe cbdc is good compare to other borrowing service because this one is direct with the bank. You are sure that the transaction are safe and secure, and maybe the fees are fairer.

If you as a citizen of a country are given the opportunity or are invited to choose which digital currency your country will use, which one would you prefer between Stablecoin and CBDC?

For me, I am into crypto or decentralization in short so I will obviously choose stablecoin preferable dai but for a common individual they will likely pick cbdc.

[odolvlobo]

If every bank produced their own stablecoin, there would be a huge problem of interoperability. For example, I have Bank of America coins but the merchant only accepts Wells Fargo coins. A few coins would be manageable, but if there are 1000 coins it would never work.

So, that brings up the next problem. If there can only be a few coins, it would put small banks out of business because they couldn't compete with the big banks.

Regardless, the idea of a CBDC really doesn't make sense. A CBDC would not provide any benefit beyond what banks and central banks already provide. At least in the U.S., the Federal Reserve is run by banks, so it would not do anything that would put banks out of business.

What's the point of using a stablecoin that is backed by fiat money, when you could use fiat money directly? I believe that stablecoins have no other utility besides crypto trading.

The advantage of the stablecoin is that you can send the coins directly, something that you would not be able to do with a CBDC. In order to allow sending coins directly, the central bank would have to give up control of the money, and that's something it will never do.

You can't use fiat money online

What are you talking about? I use online dollars to pay my bills and send money to friends all the time. I use credit and debit cards to buy stuff with online dollars.

[Darker45]

If were a citizen and asked which one to prefer, a stablecoin or a CBDC, I would prefer a CBDC. Both are bad choices, of course, but it is rather odd for a country to use a currency issued and controlled by a private company.

I don't agree with Lowe that a private company is better than the government in setting up a digital currency and that there would be a high cost in doing this. First, the government has so much money than private companies. It could hire the best people; it could also train its own to come up with a great design for its digital currency. Second, the costs of regularly issuing new bills and coins are probably way higher than designing a digital currency. And once a CBDC is issued, maintenance is very low. A CBDC can't be crumpled, folded, creased, and so on. It doesn't deteriorate like bills. It doesn't have a lifespan.

[tvplus006]

Given the fact that CBDC is an alternative form of fiat, along with cash and non-cash, then accordingly it will be trusted in the same way as fiat. As for the use of stablecoins, it cannot be safe for the country's financial system, since the government will not be able to control the emission of such stablecoins.

[NeuroticFish]

Regardless, the idea of a CBDC really doesn't make sense. A CBDC would not provide any benefit beyond what banks and central banks already provide. At least in the U.S., the Federal Reserve is run by banks, so it would not do anything that would put banks out of business.

Well, they don't care about the (lack of) advantages for the average Joe. They think on advantages for them, advantages we know - full tracking and control on people's money. Of course, they may sell CBDCs as good for businesses, which will no longer have to pay big fees to VISA/MasterCard, instead they will pay a symbolic fee (if any) for the use of the database (CBDCs) coin. And if they wrap that nicely, people will use CBDC instead of cards.