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of the month Fintech Times We take a look at why digital currencies are gaining popularity. It also reveals new alternatives to cryptocurrencies and why the digital future is so interesting. His second focus this month is central bank digital currencies (CBDCs). First, we analyze the countries leading the development of CBDC.
We collected a variety of opinions from across the industry. block earrings, connor Svensson, Nick dry, Bobby Pham When Cecilia Tames On who is driving CBDC development in 2022.
Brock Pierce is Bitcoin Foundation, an American non-profit organization and cryptocurrency innovator seeking to restore Bitcoin’s reputation. He explains what CBDC is and which countries he thinks are on the way.
In many ways, CBDCs are the same as traditional fiat currencies. What distinguishes CBDCs from traditional fiat currencies is that they are digital rather than physical paper money. They are simply digital versions of traditional fiat currencies. CBDCs do not offer some or many of the benefits of cryptocurrencies, including decentralization and promoting financial inclusion by opening up financial tools to those without traditional bank accounts. includes the ability to
Countries that have already launched CBDCs or CBDC pilot programs are the Bahamas, Jamaica, Nigeria, China, and eight Caribbean countries that have jointly launched Dcash. Eastern Caribbean Central Bank (ECCB). China’s digital yuan pilot program is expected to be fully launched in 2023. Altogether, 105 countries representing about 95% of the world’s GDP are currently considering his CBDC.
“according to Atlantic Ocean Councilamong all G7 countries, the US and UK are the least developed CBDC programs.
The United States does not have a CBDC, but there are some digital dollar cryptocurrencies that are pegged to the US dollar. will be.
Conor Svensson Web3 laboratory, a blockchain technology company. Svensson analyzes his CBDC development in China while also identifying small countries that have made great strides.
CBDC is being adopted by both small and large countries. China has made far more progress with its digital renminbi than any other major country. It has been tested in cities, with plans underway in other major cities and in Hong Kong.
In some of the smaller global economies, CBDCs are already active, such as Nigeria, Africas largest economy, which launched eNaira last year. All started at different maturity levels.
Surprisingly, despite being economic powerhouses, the US, the ECB and the UK are further behind in CBDC development. Finality We operate synthetic CBDC for all intents and purposes.they offer bank of england-Regulated wholesale payment infrastructure using blockchain technology. It is not a classic wholesale CBDC as it is not controlled by the Bank of England (although it is regulated by banks).
On the other hand, CBDCs face several challenges. These include vulnerabilities to cyberattacks and the need for a robust regulatory framework to cover privacy, consumer protection and anti-money laundering standards. included.
While many countries are seriously exploring alternative international payment systems, we still have a long way to go to have a stable coin in both name and nature. , should work well.”
Mojarup CBDC Center of Excellence (COE) was established to advance the Foundation’s mission to advance financial inclusion in emerging markets. Its director, Nick Drury, explains why he thinks CBDC development is so important:
Across Asia and Africa, we see ongoing exploratory work on CBDCs enabling individuals to settle funds across borders faster and at lower cost. To bring it down, much more needs to be done, especially if we want to reach the United Nations Sustainable Development Goal of 3%.
As large-scale aid programs become more and more digital in nature, we need to further reduce settlement times and costs. More countries are investing in instant payments infrastructure because of the need for G2P (government-to-person) and cross-border payments. and only a small part of the international assistance programme. of world Bank.
“Migrant workers send $200 home on bank rails Must pay $18 or more (6%) is more than double the target of the UN Sustainable Development Goals, according to the World Bank. As part of the ongoing implementation of comprehensive interoperable technologies, the CBDC must play a key role in further reducing cross-border payments costs to meet his 3% SDG target.
Connecting the underlying payment rails between the Asian and African corridors will only happen if both regions have equally comprehensive and interoperable systems. Combining CBDC and instant payment services. They need to consider how to ensure that funds can be traced back to their ultimate beneficiaries, and have strong fraud protection to complete transactions in near real time and combat terrorist financing and anti-money laundering. You have to use the function.”
Bobby Pham, CMO, cardia chain, explains that rumors of CBDC are not always circulated due to the sheer belief that technology can help. He has examined four of his CBDCs that have been implemented or tested in the wild.
More than 100 countries are working on or have already launched CBDCs.
“However, many of the countries in the investigation stage may be stating this simply for political gain.
The Bahamas has long been viewed as a tax haven for wealthy individuals and large investors. The crypto market attracts many of these investors, so it is no surprise that they launched his CBDC first. This could be a move to maintain it as one of the safe havens that is attractive to wealthy investors.
I expect them to be one of the first powerhouses to launch a CBDC. Having his own CBDC allows the PBOC to keep tabs on financial transactions. Without this it would have been much more difficult for them.
Nigeria is the largest economy in Africa and ranks 31st in the world. With a population of over 200 million, the city is filled with a bright, young population who have embraced technology. We are confident that the addition of CBDC will enable a larger population to access financial services.
The RBI has expressed concern that crypto assets are being used for money laundering and tax evasion. But they see cryptocurrencies as an opportunity. This will enable much of the 130 million unbanked population to access financial services. This in turn will boost the world’s fifth largest economy.
Cecilia Tamez, Chief Strategy Officer, Remittance Systems for Paytech, said: Euronetdistinguishes between CBDC development in emerging and established markets.
Some central banks have already launched digital currencies.
Every country has its own infrastructure challenges, population, and unique requirements when it comes to digital currency. However, there are some general advantages driving interest and investment in developing CBDCs. include modernizing technological payment infrastructure, reducing transaction fees and payment complexity, improving economic health through financial inclusion, increasing payment transparency to curb financial crime, and improving economic policy. includes a desire to have greater control over
There are notable differences in these motivations, especially between emerging and established markets.
Emerging markets want to leverage digital currencies to modernize and jump over the hurdles presented by traditional banking and payment infrastructure. Nigeria, for example, introduced one of the first CBDCs in the world. By enabling access to eNaira via mobile wallets, the central bank hopes to improve financial inclusion to 90% of the population, which is 36% of the population with a bank account. It’s huge for a market that isn’t.
Established markets are considering CBDCs with the aim of influencing the transformation of digital payments in their countries. It seeks to improve security, stability, and if central banks can actively control how CBDCs are implemented, they can shape the impact of the currency on economic policy.
Francis Bignell
