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
-
Bruce Andrews on the Geopolitics of Semiconductors
Podcast
Emily and Geoff quickly debrief on the week’s tariff news, including new 25% levies on steel and aluminum imports, before chatting all things semiconductors with Bruce Andrews...
By Emily Kilcrease & Geoffrey Gertz
-
Trump Targets Steel, Aluminum with 25% Tariffs | Bloomberg: The Asia Trade
Video
Emily Kilcrease, senior fellow and director of the Energy, Economics, and Security Program at the Center for a New American Security (CNAS), joins to discuss tariffs and the b...
By Emily Kilcrease
-
O Canada! Making Sense of Last Weekend's Tariffs
Podcast
Emily and Geoff digest this past weekend’s on-again, off-again 25% tariffs on Canada and Mexico, as well as the 10% tariffs on China (that at least for now are still here), an...
By Emily Kilcrease & Geoffrey Gertz
-
A World Safe for Prosperity
Commentary
U.S. President Donald Trump jolted the global economy this past weekend when he announced sweeping tariffs on Canada, China, and Mexico, the United States’ three largest tradi...
By Geoffrey Gertz & Emily Kilcrease
