December 14, 2020
Central Bank Digital Currencies: The Threat From Money Launderers and How to Stop Them
Digital currency appears to be the future of money. Efforts to merge monetary policy and instruments with computer-science-driven financial technology are gaining momentum globally. Central banks in large and small economies alike are proposing to revamp their monetary systems by deploying new types of digital tokens that would be managed by a single authority and designed for wide-scale retail use. Unlike independent cryptocurrencies such as Bitcoin, central bank digital currency (CBDC) has a high chance of national adoption precisely because it would be issued by a nation’s monetary authority, with its value backed by government fiat and its use encouraged by public policy.
Digital currency appears to be the future of money.
Any large economy that builds and deploys a CBDC is likely to encounter new financial crime risks. Compared to physical cash, CBDCs will in certain respects make it easier for regulators to fight money laundering, and key technical aspects of CBDCs will hinder some traditional illicit financial techniques. But CBDCs will nevertheless be a tempting target for bad actors, both state and non-state, who will adapt their methods accordingly. In particular, the unique technical features that CBDCs will add to fiat money—such as wallet programmability and microtransactions (the ability to transact at volumes below a penny)—will enable more intricate money laundering schemes.
Read the full article in Lawfare.
More from CNAS
-
Economic Security in Asia Part 1: China's growing pains with Dan Rosen
Podcast
Dan Rosen, leading expert on China's economy and head of the Rhodium Group's China practice, joins Emily and Geoff to talk about the recently concluded third plenum meetings i...
By Emily Kilcrease & Geoffrey Gertz
-
What a Bunch of Malarkey!
Podcast
Emily and Geoff discuss the U.S. presidential election and what that might mean for economic security policy. They get into trade policy, what both candidates would do to comp...
By Emily Kilcrease & Geoffrey Gertz
-
How U.S.-China Competition Upended the International Economic Order and What the United States Can Do to Fix It
Podcast
On June 26, CNAS hosted an event to discuss a new report, Disorderly Conduct: How U.S.-China Competition Upended the International Economic Order and What the United States Ca...
By Emily Kilcrease, Geoffrey Gertz, Adam Tong & Peter Harrell
-
Sanctions by the Numbers: 2023 Year in Review
Reports
Executive Summary In 2023, the Biden administration continued to prioritize sanctions as a key tool to support U.S. national security and foreign policy objectives. The United...
By Rowan Scarpino & Jocelyn Trainer
