What would happen if the government prevented its population from making purchases using cash and mandated that you use a digital currency?

Cash has been a long-standing and widely accepted form of payment, but it is facing increasing competition from digital alternatives. Some governments are even considering or experimenting with issuing their own digital currencies, known as central bank digital currencies (CBDCs). A CBDC is a digital or electronic form of the sovereign currency that acts as legal tender and is regulated by the government. Unlike cryptocurrencies, which are decentralised and operate outside the control of any authority, a CBDC is centralised and backed by the central bank.

gold-and-silver-stack

Benefits of a CBDC

Some of the potential benefits of a CBDC include:

Enhancing financial inclusion by providing access to digital payments for the unbanked or underbanked population
Improving efficiency and reducing costs of payment systems by enabling faster, cheaper, and more secure transactions
Supporting innovation and competition in the financial sector by creating new opportunities for fintech firms and payment service providers
Strengthening monetary policy transmission and effectiveness by allowing the central bank to implement negative interest rates or helicopter money
Increasing transparency and combating illicit activities such as money laundering, tax evasion, or terrorism financing by enabling traceability and verification of transactions

Challenges and risks of a CBDC

However, a CBDC also poses some significant challenges and risks, such as:

Disrupting the existing financial intermediation and stability by reducing the role and profitability of commercial banks and creating bank runs or disintermediation
Eroding privacy and civil liberties by exposing personal and financial data to government surveillance and censorship
Creating cybersecurity vulnerabilities and operational risks by relying on complex and potentially unreliable technology platforms and infrastructure
Generating social and political resistance and backlash by imposing a radical change in the way people use and perceive money
Losing sovereignty and competitiveness in the global market by lagging behind other countries that adopt or influence CBDCs

Implications of a cashless mandate

Therefore, if the government prevented its population from making purchases using cash and mandated that you use a digital currency, it would have profound implications for the economy, society, and individual rights. Depending on how the CBDC is designed and implemented, it could either enhance or undermine the efficiency, safety, resilience, and innovation of the payment system. It could also either empower or oppress the people who use it.

Disclaimer: This article is intended as an opinion piece and does not constitute financial advice. Investing in bullion carries risks, and individuals should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.

Links for places to start investing now:

Try our bullion tracker today and see the benefits for yourself!

Our bullion tracker is the easiest way to track the value of your precious metals holdings. It's fast, easy to use, and affordable.

Here are just a few of the benefits of using our bullion tracker:

Stay organised: Keep track of all of your precious metals holdings in one place.
Make informed decisions: Know the current value of your holdings so you can make better decisions about when to buy and sell.
Save money: Avoid overpaying for precious metals by knowing the current market value.

Plus, we offer a free 30-day trial so you can try our bullion tracker risk-free.

Start your free trial now: https://goldsilverstacker.com