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Illustration: Aïda Amer/Axios

Central bank digital currencies, or CBDCs, represent the ultimate ratification of digital finance: Its adoption by the most venerated guardians of the international monetary architecture.

Why it matters: Crypto-evangelists often talk about CBDCs in awed terms. But it's far from clear that the bitcoin-and-ethereum crowd would ultimately benefit from money going digital.

How it works: The country with by far the most advanced digital currency is China — but eCNY, as the Chinese digital currency is known, is pretty much the exact opposite of bitcoin and everything it stands for.

  • It doesn't use blockchain technology. Instead, the ledger of who owns what is closely held at the Chinese central bank — and nowhere else.
  • While bitcoin is based on zero trust, eCNY requires full trust of the Chinese monetary authorities. If it goes global, then China will at all times know exactly how much of its currency you possess — and could zero you out for any or no reason.
  • While bitcoin is a deflationary currency designed to increase in value over time, eCNY is an inflationary currency designed to decrease in value over time. In fact, in its current incarnation, it expires worthless if it isn't spent within a few weeks.

The big picture: eCNY is an attempt by China to move toward a monetary and payments system wherein the Communist Party can have full visibility into, and control over, citizens' financial lives.

  • Other CBDCs won't necessarily go that far. But the ability to keep track of all transactions is part of why they're attractive to central banks that are losing the global war on money laundering.
  • CBDCs are also attractive to central banks precisely because if they're set up so that they can expire or lose their value over time, that would act as an incentive to spend, in countries that are struggling to reach their target inflation rates.

The bottom line: The power of central banks, both as issuers of currency and as financial regulators, is easily great enough to ensure that CBDC architecture replaces whatever nascent technologies are currently being built in the crypto space.

  • If that happens, then cryptocurrencies would become little more than digital collectibles — a store of value, perhaps, but one with no real transformative potential.

Go deeper

Super typhoon Surigae explodes to Cat. 5 intensity

Super Typhoon Surigae seen on satellite imagery Saturday morning east of the Philippines. (CIRA/RAMMB)

Super Typhoon Surigae surged in intensity from a Category 1 storm on Friday to a beastly Category 5 monster on Saturday, with maximum sustained winds estimated at 180 mph with higher gusts.

Why it matters: This storm — known as Typhoon Bising in the Philippines — is just the latest of many tropical cyclones to undergo a process known as rapid intensification, a feat that studies show is becoming more common due to climate change.

2 hours ago - World

In photos: The funeral of Prince Philip puts military and royal tradition on display

Prince Philip’s coffin, covered with His Royal Highness’s Personal Standard is carried to the purpose built Land Rover during the Duke of Edinburghe's funeral. Photo: Adrian Dennis/WPA Pool/Getty Images

Prince Philip, the Duke of Edinburgh who died April 9 at age 99, will be laid to rest on Saturday following a funeral service at St. George’s Chapel on the grounds of Windsor Castle.

The big picture: "His send-off will be highly unusual — in part because coronavirus restrictions meant the ceremony had to be scaled back, but also because it comes just after a very public airing of a family rift," The New York Times writes.

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