In my opinion, the move to create their own digital currency is a positive development.
It means, that the government believes the benefits gained from this technology.
With their action, they are indirectly showing to its constituents that they trust crypto.
Which will then give a positive mindset towards crypto and so it will create more demand of usage.
I consider it as an opportunity to widen the usage of crypto and not a threat.
People later on will see the difference between a decentralized vs centralized coin.
So it will be their choice which one they will use when that time comes.
Digital currencies, in addition to mass introduction into everyday life, will allow the government to solve the problem associated with counterfeit money. In addition, it is an opportunity to reduce the costs associated with the issuance of fiat money and their maintenance.
That is probably true but this is a positive argument for the government. They could also check the accounts of every citizen, see their transaction history, control what they do and at the end we would end up like the Social Credit System of China. In the end it eliminates privacy for normal people.