1. MOTIVATION FOR REPLACING THE DOLLAR The federal government’s interest in replacing the U.S. dollar with a CBDC is often driven by the potential benefits of a more efficient, transparent, and inclusive financial system. CBDCs are seen as a modernization of the monetary system to keep pace with technological advancements. 2. CONCERNS AND PITFALLS OF A DIGITAL CURRENCY A. PRIVACY ISSUES One major concern revolves around the loss of privacy. Digital currencies operate on decentralized ledgers, exposing all transactions to scrutiny. Striking a balance between transparency and individual privacy becomes a critical challenge. B. CYBERSECURITY RISKS The digital nature of CBDCs exposes them to cybersecurity threats. Hacking attempts, fraud, and other malicious activities could compromise the security of the digital currency system. Cyber attacks on government systems and fraud are at an all time high. C. FINANCIAL EXCLUSION Despite the aim of financial inclusion, there is a risk that certain segments of the population, especially those without access to technology or digital literacy, might face challenges in adapting to a cashless society.


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