Cash usage has lost plenty of ground to virtual payments as the COVID-19 has completely changed the way people transact globally. Some experts have recently argued that CBDCs could solve the matter of leaving that payment data within the hands of major tech platforms.
Within an official web-blog published, Federal Reserve of New York researcher Michael Lee and University of California Santa Barbara economics professor Rod Garratt expounded on a paper they revealed earlier this month.
The authors highlight tech firms’ troubling usage of consumer data, which has already landed everyone from Visa to Facebook in trouble for potential antitrust violations. The web-blog post adds:
“Transactions using virtual payments permit firms to capture users’ personal data; while cash doesn’t. Data aren’t shared between firms. By gaining exclusive access to data from their own customers, firms may use this information to realize a competitive edge.”
A CBDC, the researchers suggest, is that the best successor to take advantage of in terms of efficiency and consumer protection within the digital age. While the post mentions crypto assets as a separate alternative to greater payment platforms, it doesn’t explicitly advocate distributed-ledger technology for a CBDC. It does, however, say a CBDC would be cheaper and more eco-friendly:
“Privacy-preserving digital payment alternatives, like crypto assets, involve high transaction costs and maybe environmentally costly. Private initiatives proposed by ‘BigTech’ firms are likely to steer to even less privacy.”
Research into CBDCs has been accelerating. Interest initially soared at the starting of the COVID-19, and presently leading central banks and financial institutions are busy churning out investigations into what must change for various jurisdictions to digitize their money.