OP-ED

What does a CBDC future look like

TL:DR Breakdown 

  • CBDC’s are growing in popularity.
  • Many countries are contemplating going CBDC.
  • The IMF is predicting a global digital reserve.

What does a CBDC future look like

There has been a lot of news about central bank digital currencies ( CBDC’s). Banks are at crossroads. Due to growing cryptocurrency adoption banks have to decide to join the crypto world or struggle to survive.

Bitcoin, which launched 12 years ago, has surged in popularity so much so that it’s price continued to rise. Thanks to BTC, many other cryptocurrencies popped up.

BTC brought along the blockchain. Blockchain has since been innovated to be able to do wonders.

Crypto wallets and exchanges erupted to help keep cryptocoins safe as well as change them into cash.

The emerging crypto world is a threat to the bank because BTC exists to replace the reserve currency. The saying goes if you can’t beat them join them. 

A CBDC uses blockchain to form a digital currency which much like cryptocurrency replaces the fiat currency. The only difference between CBDC’s and cryptocurrencies is that the former is issued to be centralized and regulated by a monetary authority.

CBDC’s digital currency then represents a countries currency. 

Who is adopting one and why

Many countries have declared that they will launch a CBDC, but China appears to be ahead of the game. China has already launched a digital yuan and has been successful so far.

Other countries like Canada, France, and Australia have declared they are en-route to release their own crypto. Many others are still pondering the Crypto path. 

The International monetary fund

Altcoins have not only had an impact on CBDC’s, but the dollar may lose its influence. The international monetary fund has released a report suggesting that soon the dollar will not be able to be the dominant reserve currency.

The IMF is proposing that countries will lean on stable coins. Stablecoins are cryptocurrencies which are linked to money of any kind.

The IMF suggested that while stable coin demand could push for the fiat currency to remain popular, this is less likely. What is most likely to happen is that there will be more than one main digital reserve currency. What the IMF is pointing to is a world where everyone uses digital currencies. 

It is most likely that CBDC currencies will go from being an idea to something that banks put into action. Banks should feel threatened by the growth of cryptocurrencies because if they dominate, the fiat currency will cease to be useful.

If banks want to survive the emerging digital landscape, they will likely adopt the CBDC and explore its benefits. There is a lot of money to be made by operating as an exchange too for the growing digital landscape as well as finding ways to manipulate blockchain and teach its powers to others.

Countries can gain from a CBDC world as it unlocks them to a digital realm with more possibilities. Cryptocurrency is a route that banks can take to leave behind their troubled past once and for all.

This post was last modified on January 8, 2021 1:40 am

Camomile Shumba

I am a freelance journalist that is always learning and investigating. I explore how current issues affect you. My training in journalism has enabled me to write thorough and compelling content.

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