The talks about central banks’ digital currencies became intense this year. Usually, crypto experts predict a possibility of it coming one day, not that there were any plans in place before 2020. Everything changed this year for cryptocurrencies, especially since the growth of Bitcoin. The speed at which the digital asset surged might be a key influence for states to make CBCD’s creation necessary.
The initial sign that the central currencies might emerge was the event in Davos. The prominent forum, WEF, made the process for creating digital assets for governments globally. Statistics in 2019 suggested that countries interested in crypto might one day infuse it into their financial systems. In 2020, however, BIS reports shared that 80% of central banks are thinking about integrating the blockchain tech into their system.
Source of the sudden interest in CBDC
The idea that central banks are issuing cryptocurrencies is no longer a suggestion because some dominant countries like China are working towards creating a currency that ensures simplified cross-border payments. Interestingly, developing countries are taking higher steps of adopting this technology when compared to already developed nations.
The developed nations want to understand the currency better before integrating it into their system. Despite talks about central digital currency for most European countries, the EU is careful to process the digital Euro creation to avoid mistakes thoroughly. Influential players in the European Union explained that the currency would be available within five years.
The Canadian government is also taking their time to create an official currency, which some suggest will take several years. The Russian official also explained that they are not in a rush to issue digital assets. The European country’s digital asset is in its planning phase, so by next year, the public might see its early stages. China and America had some unpleasant backlash due to China’s digital yuan, which the country is actively processing its creation.
Some Americans accused the Asian country that it plans to use the digital yuan to eradicate the dollar as the central currency for commercial purposes globally. China denied the allegation and explained that its money was no threat to the dollar. The country also promoted its central currency and suggested that the digital yuan’s global adoption will make payments more manageable.
How covid-19 influenced the CBDC
The world never expected the hit it got this year with the dreaded Covid-19. The global pandemic led to most countries’ economic downturn, making investors put their funds into digital assets like Bitcoin to preserve its value. Since individuals ran to the support to retain their money, Countries also saw that creating a central currency could help the economy return to its previous position or even become better.
Many people don’t trust state-owned digital currencies because of the intermediaries wasting transaction time. Brian Brooks explained that CBDC is discussed intensively now, and he claimed the most important question to be asked now is how countries can adopt the digital currencies. Brooks said the US might make major moves concerning the digital currencies soon.
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