Many countries are shifting towards introducing their own state-backed digital currencies. Central banks are exploring the potential of CBDCs. But is this effort really a good move on the rest of private coins including Bitcoin, Ethereum, and XRP?
Kenya, through its central bank, has lately announced a controversial move to employ bitcoin as a reserve currency in a bid to improve the country’s economic performance. However, whether or not this shift will serve the intended purpose remains a matter of debate.
The COVID-19 pandemic has opened the eyes of many central banks and has now taken a route of fintech innovation. Some of the major tools being currently looked at is introducing central bank digital currency (CBDC) into the finance and banking industry. But the main question is how these new forms of digital currencies impact the economy.
As many countries are competing to see who will be the first to launch an effective working central bank digital currency (CBDC), China seems to be in the lead of this game. The country has carried out several trials of its digital yuan in different parts of the country.
As most states in the world are moving towards rolling out their own state-backed blockchain-based digital currencies, Ukraine, a cryptocurrency-friendly country in Eastern Europe has also decided to follow the lead. The state is going to develop its own central bank digital currency (CBDC).
The existing interaction between banks and cryptocurrency companies is not the best so far, and there are little to no efforts being put in place to address this issue. Some central banks are giving orders to other financial institutions not to deal in cryptocurrencies including Bitcoin. Bans and warnings have been issued by banks to keep away from using or trading cryptocurrencies.
The Central bank of Lebanon (BoL) is planning to release its state-backed digital currency known as digital pound. The bank is now the latest financial regulator to embrace the roll out of a central bank digital currency CBDC. The official launch is planned for 2021.
The European Central Bank Governing Council is advancing the work on the possible issuance and circulation of a digital euro, a type of central bank electronic money that would foil cash, not substitute it. Authorities want people to access and use these two types of money together, to offer greater choice and easier access to means of making payments.