Delayed US CBDC Adoption Could Spell Trouble

Yaya Fanusie, a cryptocurrency researcher and former CIA analyst, believes the slow start on US CBDC (Central Bank Digital Currency) development could lead to a loss of control over the global financial system.

Fanusie, currently the policy head at the Crypto Council for Innovation, noted in a Bloomberg interview on 28 February that sanctioned states seek to transact on financial infrastructure that isn't heavily influenced by the US to move funds more freely across borders.

Further, he suggests that if the US CBDC adoption continues to lag, it may result in unforeseen geopolitical implications and trouble over time. According to him, the state-issued central bank digital currencies could be a crucial element in the global adoption of such infrastructure. He also warned that the US could lose its influence over developing new standards in this area, negatively impacting its economic statecraft.

However, the US Federal Reserve has recently made progress in the US CBDC project, known as the Digital Dollar Project, with the release of its latest whitepaper on 18 January. Nevertheless, the Federal Reserve has yet to receive approval from the US government to move forward with this project.

China's advantage on early adoption of CBDC

Fanusie, in the Bloomberg interview, noted China's advantage in the early adoption of CBDC since 2014 and the launch of the pilot version of its digital yuan (e-CNY) on 4 January, 2022. According to him, the e-CNY has already processed millions of transactions across millions of wallets.

Further, he added that an array of pilots are currently testing smart contracts to introduce programmability into CBDCs. Additionally, China is assisting other nations in adopting similar standards and collaborating for their CBDC to CBDC transactions. Fanusie noted that countries might have an unspoken "race" to gain a geopolitical advantage in the CBDC realm.

## Opponents' viewpoint

Some critics of central bank digital currencies believe governments leverage blockchain-backed CBDCs to retain financial oversight over their populace.

One such instance of this resistance occurred in the United States, where Congressman Tom Emmer, an advocate of cryptocurrency, put forward the CBDC Anti-Surveillance State Act to safeguard the financial confidentiality of American citizens against potential intervention by the Federal Reserve.