• Digital currency has the potential to diminish the amount of money in the financial system, raise lending costs, and limit credit availability to individuals and businesses.
• Currency is already digital and has been for a long time. However, the underlying banking model has remained substantially identical. This is because the system is predicated on the idea that digital currency issued by commercial banks can be converted into paper cash, which is a liability of the central bank.
• Over 97 percent of the money in circulation today comes from checking deposits, which are dollars put online and translated by a commercial bank into a string of digital code. Many historically cash-based transactions have shifted to the digital realm thanks to the digitization of credit and debit card transactions and the advent of banking apps.

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