this post was submitted on 29 Nov 2023
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I took a very long time to get it as well, I think governments are doing an awful job explaining it.
So cash is physical paper which signifies debt to you backed by the government. Your money on your bank account is backed by your bank. A CBDC would be like a bank account, but directly backed by the govt, so I imagine all fees are paid from your taxes, and I imagine you can pay in a shop with your ID card. The point is that then all cash can go away, the government does not print money by printing it, it does it by increasing a number in a database table, and pays its obligation digitally.
Proponents of it talk of cutting the costs of actually printing money and decreased crime since you can no longer pay people "under the table".
Opponents of it talk of governments getting complete control over your finances.
They fear that govs could get control over your finances opposed to a handful of illegal people who pay each other under the table. Is that really the problem? A handful of people who don't deny getting money from the gov because of bad weather that ruined their warehouse, because a bad finance year because of lockdown, because of they are unemployed, almost free education and health system, etccc
Thanks, this helps a bit. But I hve a follow up question if you don't mind: how is it backed exactly? I understand the gold standard (money being backed by gold) is not really applied anymore? Or is it just to a point?
It's all just debt. So when they got rid of the gold standard, we went from "this debt we have to you is secured by our stockpiles of gold" to "trust me bro, we won't go bankrupt". It would be the same with a CBDC.
Basically the digital Euro would be secured by the fact is if it wasn't secured, the Eurozone would collapse, so states and the EU at large is interested in staying solvent.
This is great, you really dumbed it down for me, lol. Thanks!