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Could a Digital Dollar Affect Your Retirement?

Oct 3, 2023

You may have heard a lot recently about the growing interest by Congress and the Federal Reserve in what's known as a central bank digital currency, or CBDC. What is a central bank digital currency, and why all the fuss right now? And how can this impact you and your retirement? Simply, a CBDC is the next evolution of the electronic version of money that's currently being used now worldwide.

What makes a digital dollar different than the electronic dollar is that the Federal Reserve will create a wallet application that will give every citizen a place to store their dollars. The advantages of that digital currency are many. Because people can now store their money on their wallet, on their smartphone, there will be less reliance on banks, debit and charge cards, and checks.

This will also help bring the 17% of the U.S. population who currently don't have bank accounts, and therefore they don't have checking accounts or charge cards, and bring them into the modern economy. Another advantage is that a digital currency can also cut out expensive and inefficient middlemen. Imagine the government depositing stimulus checks directly into individuals wallets instead of through employers, fraudsters, or banks.

But there are also disadvantages to consider. Governments can program that digital money to not work when it's buying certain goods and services that the government deems bad. It could be something as simple as cigarettes or something more complex, like church giving or organizations suspected of communist ties.

China is using it to track their citizens spending habits and penalizing or rewarding them based on how they use their money. India is also implementing a digital currency, and part of the reason why they're doing that is to be able to catch tax cheaters and just confiscate whatever the government thinks is owed to them, right out of the individual's digital wallet.

As most of the world is considering CBDCs, so is the United States. The Federal Reserve has been doing research and designing tests. As a result, Congress now is considering new laws that would require the Federal Reserve to seek congressional approval before implementing a digital dollar. They want to be able to debate all these issues and give guidance to how this is developed. This is totally consistent with article one, section ten of the U.S. Constitution, which gives Congress the power to regulate money.

So how does this impact you and your retirement? Well, right now it doesn't impact either. A digital dollar doesn't exist and won't for the foreseeable future. But this is likely the next form of money and to make it realize its full potential, a government implementing digital currency is going to have to limit or ban cash.

The best way to protect your retirement and your privacy in this future world is to diversify and have some assets and retirement investments in forms that don't rely on the electronic or digital forms of the dollar. Things like owning physical gold. That's one compelling reason why I own a gold IRA. Mine is from U.S. Money Reserve. If you're interested in exploring this option to diversify your retirement investments, call 1-866-646-8465 and ask to speak to a US Money Reserve IRA specialist.

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