The Bank for International Settlements (BIS) released a recent report where you can see the fear of Bitcoin as real reason why banks want digital currencies. The central bank’s digital currency is a concept that has been progressively inevitable.
This is a new form of legalized currency that central banks will issue digitally. This model will use authorized or centralized distributed ledgers.
Many countries are already investigating or are launching a national electronic currency similar to Bitcoin, but the BIS document has explained that central banks suffer from cryptophobia. This is why they get involved in central bank digital currencies (CBDCs).
BIS is an organization that supports national central banks. The banks that are part of the Federal Reserve report are the Bank of Japan, the European Central Bank, the Bank of Canada, the Swiss National Bank, the Central Bank of Sweden; Sveriges Riksbank and The Bank of England.
Central Banks Are Losing Control
Banks continue to assess the CBDCs conceptual effectiveness and how they can support central banks with public policies.
One main concern of central banks is losing control of the payment system. For them, this system is put at risk if cryptocurrencies such as Bitcoin are adopted.
The Role Of The Private Sector With Digital Currencies and Bitcoin
Central banks are seeking virtual currencies that are either cheap or free to use, and do not harm the financial stability of the country.
Additionally, the report also reveals that they want cryptocurrencies like Bitcoin to coexist with other legal offerings like cash.
Central banks do not want these digital currencies to make cash obsolete, but both can be used normally. the BIS believes virtual currencies can offer more efficient, resilient, and advanced payment methods.
Central banks must play a role appropriate for the private sector while being innovative and competitive.
Korea To Begin The Circulation Phase Of Digital Currencies.
Asian countries like China and South Korea are already closer to launching their digital currencies like Bitcoin. Korea has announced that its virtual currency will begin to circulate across the country in 2021.
On the other hand, Japan has said that it is not interested in launching a cryptocurrency. According to a recent report, the government has no plans to issue digital currencies by the central bank.