Various central banks have launched the initiative to study blockchain solutions in the development of central bank digital currency. Some even start testing their pilot programs via commercial banks. According to Visa’s exec, central banks still have no intention to offer customer-based digital currency solutions as an alternative to cash.
Digital Currency must be Consumer-focused
The Visa head of crypto claims that the central banks do not have an interest in providing digital currency to consumers. There are many challenges in giving the mainstream position to CBDC in place of cash.
Cuy Sheffield, the head of the crypto at Visa, said in a tweet:
“If a central bank decides to offer a digital wallet directly to consumers then by default CBDC and the central bank would have to become a household brand but this approach seems unlikely to be taken seriously by most major central banks due to operational challenges.”
Before this statement by Visa’s official, the report of blockchain firm R3 claimed no central bank is giving its first choice to consumers in the launching of CBDC.
Currently, there are two views: one is seeing CBDC as a cash replacement while the other one is focusing on it as a payment infrastructure for banks. To make things digitize, the central banks need to rethink the creation of CBDC that must be consumer-focused. Sheffield stated:
“This would be particularly difficult to explain if CBDC is designed in a way that doesn’t allow a consumer to do anything different than they could with an app like Venmo connected to their existing digital deposits at their bank.”
Difference between Digital Cash and Digital Deposits
The consumers or citizens will accept state-owned digital currency more beneficial it they can find it different than traditional payment system as Sheffield goes on to say that “the other option is just to say that consumers won’t need to know the difference between ‘digital cash’ and ‘digital deposits’ any more than they will understand the difference between FedNow and TCH payment rails.”
Recently, Visa has filed a patent application for digital currency, and the company has a plan to establish the digital dollar that will circulate under a central authority such as a central bank.