Bank for International Settlements Delighted About CBDCs
The Bank for International Settlements (BIS) is unwavering in its endorsement of central bank digital currencies (CBDCs). The bank asserted that central bank digital currencies have a role to play in ensuring that the traditional financial structure is not disrupted by privately issued cryptocurrencies. BIS released a research paper where it stressed that CBDCs presented the peculiar benefit of central bank money. The BIS further said that CBDCs are designed for the benefit of the public and should be integrated in retail payments gateways.
More Countries Plan on CBDCs
The hype around CBDCs has been going on for months now with countries such as China, UK, Canada, Venezuela already at the frontlines although a launch date for the CBDCs is yet to be announced. China in particular has gone further than the rest of these countries with its digital Yuan, which is already being pilot tested in several cities in the country. China hopes to enable global acceptance for the digital Yuan irrespective of the concerns raised against it. The idea of a CBDC had been first proposed by the Bank of England (BoE) in 2015.
While most countries are looking to float their CBDCs, some countries have opted for embracing Bitcoin and other cryptocurrencies and regulating them rather than an outright ban as has been the case in China. Experts believe that China placed a ban on Bitcoin mining in the country to pave a way for its CBDC. One of such countries that have opted for regulation is El Salvador which became the first sovereign state to embrace Bitcoin and make it a legal tender.
BIS noted that CBDCs will function alongside each country’s fiat currency. It also asserted that in its report that CBDCs are designed as part of a double-deck structure with each party– the central bank and the private sector– expected to perform their respective roles. The BIS further added that the structurewill be designed such that a bulk of the operational and consumer-based activities are assigned to commercial banks and private Payment Service Providers (PSPs) who offer retail services. On the other hand, the central bank will be concerned with operating at the centre of the system.
BIS Faults Privacy Concerns on CBDCs
While privacy concerns have been on the front burner of potential risks with respect to CBDCs, the BIS argued that it was necessary to be able to identify users as a CBDC with total anonymity would give way for unlawful activities such as money laundering. The BIS instead enjoined central banks to design account-based CBDCs such that they can integrate with already existing data such as academic credentials, tax records, marriage status, etc. Similarly, China plans to adopt what it termed as ‘controlled anonymity’ which most people believe is vague and subject to abuse.
In light of account-based CBDCs, the BIS said central banks would have to establish a separate entity for identity verification and data safety. Also, to prevent cyberattacks, secure and fool-proof measures would be set up. The BIS concluded in its report that CBDCs could operate alongside privately issued stablecoins.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
