Palestinian Monetary Authority Looks to Launch Own CBDC
Per a Bloomberg report, Palestine looks set to follow the footsteps of Isreal in launching its own central bank digital currency (CBDC). You would recall that Isreal recently announced that it would soon launch its digital shekel and has begun testing already using the Ethereum network.
Why a Palestinian CBDC is Important
Palestine, which shares boundaries with Isreal since the 90s, doesn’t have a primary currency. Their primary currency is Isreal’s shekel, while they combine the shekel with other currencies like the Jordanian dinar and the U.S. Dollar.
During a recent interview with Bloomberg television, Palestine’s governor on monetary matters revealed that the launch of a Palestinian CBDC is imminent as two feasibility studies are already being carried out.
He further said that the ultimate goal would be to use the virtual currency as a payment system in and outside Palestine, including Isreal and other nations. Hopefully, this Palestinian CBDC would be good news to Palestinian banks. Palestinian authorities have barred them from transferring huge amounts of cash across the border, not even to Isreal. Hence, they have to obtain a loan to take care of remittances.
However, some analysts argue that a Palestinian CBDC may never become a reality. They refer to the weakness of the country’s local economy and their authority’s huge dependence on foreign goodwill and remittances. Furthermore, there isn’t a free flow of goods and people between Isreal and Palestine.
Bank for International Settlements (BIS) Makes A Case For CBDCs
Meanwhile, ahead of its full report, which won’t be released until later this month, the BIS released a chapter out of the report to show full support for CBDCs.
However, it still upheld the agelong banking belief that bitcoin only exists for criminals and shouldn’t be classified as an asset class. Part of the released chapter states that CBDCs will “aid an open, safe and competitive financial market for innovation and public interest.”
A section of the chapter titled “Money in the digital era” stated that “recent events have clearly shown that digital currencies are not monetary but speculative assets. They are mostly used for various financial crimes such as ransomware attacks and money laundering. While the general populace seems fascinated by bitcoin, no one can ignore its adverse effects on the environment.”
That chapter further reiterated various media reports on how bitcoin miners aren’t adhering to measures that can keep the environment safe. However, it failed to disclose what steps the banking industry is taking to remedy the situation. The report also failed to acknowledge that the blockchain technology’s transparency and immutability make it easy to track anyone using bitcoin for fraudulent purposes.
Most financial institutions still believe that nothing good can come out of cryptocurrencies. They even accused digital currencies of causing financial instability. Banks also have a new policy of setting aside some capital as loans to those who lost their money while investing in cryptocurrencies. Hopefully, when the BIS releases the full report, it would make more clarification regarding its stance on the crypto world and CBDCs.
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