Source: The Paypers
Central Bank Digital Currencies for Beginners is a quick reference guide into CBDCs that aims to inform readers about what CBDCs are, the innovation they promise, and the implications and risks they pose.
The projects and debates around this topic have been stirred up by the rapid digital transformation brought by the current COVID-19 pandemic, need to improve cross-border payments, (via stablecoins such as Facebook’s Diem), financial inclusion, etc. The benefits of such projects are huge – cross border payments can be faster and cheaper, availability of payments means for undeveloped/underdeveloped countries or for vulnerable citizens (can support fiscal/stimulus transfer), traceability of payments (support money laundering fight), payments digitalisation, programmable money etc.
However, despite the benefits CBDCs entail, there are also fiscal and monetary risks, together with data and privacy issues. As such, central banks are still examining the implications these projects involve and test different tech that could be applied to design optimum versions of CBDC (DLT, blockchain, NFC, use of mobile devices, online and offline networks, etc.).
All in all, CBDCs are an exciting and innovative perspective to consider when talking about the future of money/transacting. Because it has a great impact on financial systems and monetary policies, the topic of CBDC is constantly debated and we expect more proof of concepts/trials to happen in the coming months and more articles and reports coming out.
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