Cambridge – as the 2019 coronavirus crisis accelerates the long-term shift away from cash (at least in legal taxes and legal transactions), official discussions about digital money are heating up. At the time of the upcoming Libra cryptocurrency and China’s proposed central bank digital currency, events today could reshape global finance in this generation. A recent G30 report argues that central banks need to start acting quickly if they want to influence results. < / P > < p > many things are at stake, including global financial stability and information control. If financial innovation is not properly managed, it is often the root cause of the crisis, and the U.S. dollar has endowed the United States with important supervision and sanctions capabilities. From China to Europe, there is a growing desire to challenge the dominance of the dollar, not only in terms of the currency used, but also in the system of settlement transactions. This is where a lot of innovation happens. The central bank can take three different approaches. The first is to make major improvements to the existing system: reduce credit and debit card fees, ensure financial penetration, and upgrade the system so that digital payments can be cleared instantaneously instead of taking a day. < p > < p > the United States lags far behind in all these areas, mainly because of the strong banking and financial lobbying. To be fair, policymakers also need to consider how to secure payment systems: the next virus to hit the global economy is likely to be digital. Rapid reform may bring unexpected risks. < / P > < p > at the same time, any effort to maintain the status quo should provide space for new entrants, whether it is “stable gold coins” linked to major currencies like Facebook’s Libra, or the issuance of redeemable platform tokens by large retail technology companies such as Amazon and Baba, which should have the ability to purchase and sell products on the platform. < / P > < p > the most radical approach would be to use a dominant retail central bank currency so that consumers can open accounts directly with the central bank. This could bring some huge advantages, such as ensuring financial inclusiveness and eliminating bank runs. < / P > < p > but radical change also brings many risks. First, the central bank is at a disadvantage in providing high-quality services for small retail accounts. Perhaps over time, this problem can be solved through the use of artificial intelligence or by expanding the financial services provided by post office branches. In fact, when it comes to retail central bank digital money, economists worry about a bigger question: if banks lose most of their retail depositors, who will lend to consumers and small businesses? These depositors are the best and cheapest source of loans for banks. < / P > < p > in principle, the central bank can re lend the funds obtained from digital currency deposits to the banking industry. However, this will give the government too much power to control the flow of credit and ultimately the development of the economy. Some may see this as a benefit, but most central bankers may have deep reservations about the central bank’s role. < / P > < p > security is another issue. In the current system, private banks play a central role in payment and lending, which has been implemented around the world for more than a century. Of course, there must be some problems, but despite the challenges brought about by the banking crisis, the collapse of the security system is not the main problem. < / P > < p > technical experts warn that while the prospect of a new cryptosystem is good (many new ideas are based on it), a new system may take 5-10 years to “perfect.”. “Which country wants to be a financial experiment?” < / P > < p > China’s new digital currency provides a third intermediate perspective. The G30 report describes China’s practices in more detail than before, including eventually replacing most paper money, but not banks. In other words, consumers will still hold bank accounts, and banks will hold central bank accounts. < / P > < p > however, when consumers want cash, they receive tokens from e-wallets at the central bank, not paper money (in any case, paper money is rapidly becoming obsolete in Chinese cities). Like cash, the central bank’s digital currency will pay zero interest, which gives interest bearing bank accounts a competitive advantage. Of course, the government can change its mind and start to provide interest in the future; if the overall interest rate level drops sharply, banks may lose their advantage. This framework does remove the anonymity of paper money, but many monetary authorities, including the European Central Bank, have discussed the idea of introducing anonymous low value payments. < / P > < p > finally, the shift to digital money will make it easier to implement deep negative interest rates, which, as I have argued for many years, will greatly help restore the effectiveness of monetary policy in a crisis. In any case, the post pandemic world will develop rapidly in payment technology. Central banks cannot afford to catch up. Kenneth Rogoff is a former chief economist of the International Monetary Fund (IMF) and a professor of economics and public policy at Harvard University.