Central banks are ready for CBDC, just not Libra

Citi: Central Bank Digital Currencies – How Will the Future Unfold

CONTENT

  • Central Banks Seek Salvation From Libra At CBDC

  • China, Eurozone and Bahamas are already testing CBDC

  • Digital currencies may appear in the near future

International consortium of news organizations developing transparency standards.

Several central banks have announced that they are testing their own digital currency. In particular, new CBDC trials may become a thing of the past due to a new financial instrument – Central Banks Digital Currency (CBDC). As of … More launched in China, Eurozone countries and the Bahamas. Even the United States and England, which openly criticized cryptocurrencies, are intensively studying the issue of creating digital money..

Libra – the engine of progress

For a long time, central banks were categorically against cryptocurrencies, calling it a “monetary surrogate” and “the main currency of drug addicts and mafiosi.” However, after the information about the creation of the stablecoin Libra appeared, in June 2019, Facebook announced preparations for the release of the digital currency Libra. The social network project immediately attracted attention … More, the leaderships of the countries have dramatically changed their policies regarding digital currencies. Several central banks at once announced that they are considering the possibility of introducing a new form of money, and China, the countries of the Eurozone and the Bahamas are already testing CBDCs inside the country. Even crypto skeptics such as the UK Central Bank and the US Federal System are exploring the creation of digital currencies..

The Facebook project became a certain trigger for central banks.In June 2019, Facebook announced preparations for the release of the Libra digital currency. The social networking project immediately attracted attention … More. Stablecoins Stablecoins – literally translated from English “stable” coins – continue to gain popularity in the digital asset market. With … More Libra was conceived as a global cryptocurrency that can be freely used in any country in the world, which actually erases borders and opens up free access to financial instruments. If Facebook’s idea is implemented, Libra could become the leading payment instrument, and this cannot but worry the governments of the countries..

“The Facebook project faced many obstacles, but the idea of ​​an alternative currency used globally was quickly seen by regulators as threatening national sovereignty, privacy, financial stability and central banks’ monetary policy capacity,” Bloomberg writes..

At the moment, central banks are considering two ways to use digital currencies: wholesale and retail. In wholesale projects, only banks and financial institutions will have access to digital currency, and the goal will be to accelerate and reduce the cost of payment flows in the existing financial system..

“In retail projects, central bank digital currencies will be issued through the semblance of central bank accounts to the general public or accounts with commercial banks working with the central bank. In the latter case, central banks could take responsibility for conducting customer due diligence, ensuring that anti-money laundering and terrorist financing requirements are met, and for providing tax information, ”says billionaire billionaire hedge fund founder Ray Dalio..

Pros and cons of CBDC

Central banks are ready for CBDC, just not Libra

Most recently, ECB President Christine Lagarde announced that the eurozone will consider creating and launching a digital euro. Lagarde named three advantages of digital currencies as a complement to fiat currencies, full control over CBDC turnover and meeting the demand for digital payments.

However, crypto experts see other positive aspects in the implementation of digital currencies, including cheaper payments, faster international transfers.,

“For China, digital currency offers a possible way to keep up with and control the rapidly digitizing economy. On the other hand, it can also give the government an additional monitoring tool, ”experts say..

However, don’t forget about the risks. Depending on the CBDC model, central banks run the risk of either abandoning commercial banks, which are a vital source of financing for the real economy, or taking on the direct risks and complications associated with banking to the masses..

Problems in running a business can undermine the public confidence that central banks rely on, allowing them to sometimes take unpopular actions such as raising interest rates. Additionally, some researchers have expressed doubts as to whether existing blockchain technology will be able to support a large volume of concurrent transactions..

In any case, central banks intend to further explore the use of CBDCs, which could become a real addition or even a replacement for fiat currency..

Disclaimer

All information contained on our website is published in good faith and objectivity, and for informational purposes only. The reader is solely responsible for any actions he takes based on the information received on our website..

Share Article

Central banks are ready for CBDC, just not Libra
Central banks are ready for CBDC, just not Libra
Central banks are ready for CBDC, just not Libra
Central banks are ready for CBDC, just not Libra

Similar articles