Central banks fear Bitcoin because of its power and they feel like they are losing control over the market so they are willing to launch digital currencies themselves. In our latest crypto news, we are reading more about the analysis.
The concept of a central bank digital currency progressed quite a lot and is becoming inevitable now more than ever. It is a new form of fiat currency issued by the central banks in digital form using a centralized or permissioned distributed ledger. A lot of countries are already getting closer to launching one while others are still researching but according to a joint paper coordinated and published by the Bank of International Settlements, we can see that central banks fear bitcoin so they are getting involved in the CBDC game.
As an international organization, the BIS provides support for national central banks as the participating banks involve the European Central Bank, The Federal Reserve, Bank of Canada, Bank of Japan, Bank of England, Central Bank of Sweden, and the Swiss National Bank. The paper outlined the key criteria for launching and publicly issuing a central bank digital currency as they asserted the feasibility of CBDCs and how they can help these banks to deliver their public policy objectives.
The major concern of the banks is that they will lose control of the payment system as the mass adoption of bitcoin grows. Central Banks want digital currencies that are cheap or free to use and they don’t harm the monetary and financial stability but they also want digital currencies that can co-exist with the legal tenders like cash and the ones that will not make cash obsolete. The BIS believes that a CBDCs have features and that “these features can promote more resilient, efficient, inclusive, and innovative payments.”
Despite not wanting to lose control, the paper said that there should be “an appropriate role for the private sector, as well as promoting competition and innovation.” Countries like South Korea and China are already getting closer to launching their digital currencies. The People’s Bank of China was cited saying the country should be the first to launch a national digital currency but other reports also rumored that the central banks started testing the digital yuan on smaller retail transactions. Earlier this week, the Bank of Korea announced that it would launch a project to issue and to circulate its digital currency in 2021. Japan however is not interested in launching one soon as the government spokesperson revealed that the country has no plans to issue a central bank digital currency.
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