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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

At least 3 dead after Amtrak train derails in Montana

Photo: Jacob Cordeiro/Twitter

An Amtrak train derailed near Joplin, Montana, resulting in at least three deaths and multiple injuries on Saturday, per a Liberty County Sheriff's Office statement to media outlets.

The big picture: Some 147 passengers and 13 crew were aboard the Empire Builder train, which runs from Seattle to Chicago, when seven cars derailed about 4p.m., Amtrak spokesperson Kimberly Woods said in an emailed statement.

Updated 30 mins ago - Politics & Policy

Federal judge blocks vaccine mandate for NYC teachers

Students are dismissed from the first day of school at PS 133 in Brooklyn on Sept. 13. Photo: Michael Nagle/Xinhua via Getty Images

A federal appeals court is set to hear a challenge Wednesday to a vaccine mandate planned for New York City school employees.

Why it matters The vaccine mandate was set to begin on Monday, prompting concerns over staffing shortages in schools across the nation's largest school system. But a judge on Friday temporarily blocked the measure, per AP.

New York prepares for staff shortages from health vaccine mandate

New York Gov. Kathy Hochul during a news conference Tuesday in New York City.. Photo: Mark Kauzlarich/Bloomberg via Getty Images

Gov. Kathy Hochul (D) announced Saturday she would declare a state of emergency if there were health worker shortages due to New York's upcoming COVID-19 vaccine mandate.

Why it matters: Hochul moved to reassure concerns of staffing shortages in the health care sector in a statement that also outlined plans to call in medically trained National Guard members, workers from outside New York and retirees if necessary when the mandate takes effect Monday.

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