The fallacy we live in is that we believe that debt based fiat currency has any value beyond the government’s promise to take it in as taxes. Otherwise, there is no other promise and anyone not required to pay US or EUR tax can just as easily transact in something else. Those holding fiat debt instruments are waking up to this.

Unlike private digital currencies like Bitcoin, the CBDCs would be a central bank liability, and would complement the current offering of cash and wholesale central bank deposits. Its value would therefore not be volatile because it would be backed by the central bank.

The interesting thing about gold is that it is no one else’s liability. It simply is, and has been a marker of wealth for millennia. Bitcoin has something of the same feature. Owning Bitcoin does not mean anyone else owes you the money, and so it stands without a counter party risk.