In the foreseeable future, people will store electronic money, cryptocurrencies, and central bank digital currencies in one bank because it is more feasible than having multiple accounts for different types of currencies. The current scenario of money and asset management is difficult to manage; it is like going out for groceries and having to buy each item from different vendors because they refuse to come together for the better. Currently, having to manage cryptocurrency and centralized currency differently is not a point of contention as the majority is still unaware of how crypto works; however, as time passes, people are getting the hang of it, and soon the banks will have to work with it, to stay relevant.
Financial Framework Needs To Change
The conventional financial framework cannot work without acknowledging the fact that there is certainly a new member in the game that is growing every day. Cambridge Center for Alternative Finance has quoted that the amount of cryptocurrency users has increased three-fold from 2018- from a mere 35 million to 101 million in 2020; this equals a 78% increase.
On an alternating note, PayPal has introduced cryptocurrency into its interface, which has led to an increase in transactions. This explains that people want banks to diversify. This will require the banks to plan ahead of time and revamp the whole structure that has been going on for decades. The task at hand is not an easy one but an important and urgent one.
Until now, the Chinese digital yuan is a single example of digital money issued and encouraged by central banks that is functional. According to sources, 60+ central banks around the globe are trying to utilize this opportunity. DCEP is made on centralized blockchain technology that is entirely managed by the Central Bank of China. The technology helps to keep all kinds of funds in control from a single remote.
Cross Country Transactions
The monetary multi-format framework is all set to become essential for financial enterprises. Banks will have to make sure that CBDC and crypto transactions can be managed from a single account: ideally from a banking application.
But the irony is that the new blockchain technology has nothing in common with its forerunners. Moreover, governments view the launch of CBDCs as an autonomous entity which means that transactions between the countries will be a daunting task.
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