The world is going to digital, and that fact is understood by even the smallest toddler of today. Aside from the changes that we have seen in the economic sectors, the financial sector has particularly seen changes. Before now, digital assets such as Bitcoin were just ideas with nothing that showed that such a financial instrument is going to be debuted.
More than ten years along the line, we have seen digital assets take over the space and even seen countries floating the idea of their digital currencies. Despite that, there has been a division in the ranks of many countries over the role that the Central Bank Digital Currencies would play in the economy.
Powell says that both CBDC and cash would co-exist
Giving trivial updates regarding the central bank digital currency of America, the United States federal reserve chairman has given a key update as to that effect. In his statement earlier today, Jerome Powell pointed out that despite propositions that the digital dollar in the works might replace cash, he said that is not the case.
In a contribution that they made towards a report submitted by the US Bank for International Settlements, Powell mentioned that they were building their CBDC on three tenets. One of them is the ability of the digital currency to be used hand in hand with cash and other means of payment.
He also mentioned at an event in Switzerland that the recent coronavirus pandemic had given governments across the globe the leeway to muster up specific ways to use money other than holding cash. Truthfully, the coronavirus pandemic limited the rate at which people sent money across the border as most countries went on lockdown, leaving them with no other option than the usage of digital assets and other forms of online payments.
China is still in the lead with several testing phases
Central Bank Digital Currencies are entirely different from regular assets such as Bitcoin and Ethereum because they are controlled by the biggest financial house in a country, their Central Banks. Even though the idea has been touted for a relatively short time, countries are currently working to create digital versions of the currencies.
In cases like these, even if the countries have not yet rolled out the currencies for adoption, they can establish what they want the digital currencies to look like. Out of all the qualities that have been touted by countries so far, it is understandable that most of them want their digital currencies to be a secure payment network (in and out of the country) and as fast as every other payment method, including digital assets.
Also, we have been able to see different designs that have bordered on just two uses: a peer-to-peer payments system and use for banking purposes. Lastly, most countries are still researching the kind of benefits that they stand to derive from the development of the CBDC. In contrast, others led by China have already rolled out different testing phases across the country.
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