This is not an easy time for central bankers. On the one hand they have to face the right storm day by day (inflation, recession, high public debt) Now on the horizon, private digital currencies, which can only be advertised by some picktech or digital currencies of some other states.
To clarify what we are talking about, digital central bank money will be the equivalent of banknotes, but in digital form (it will only be on the network). It has the solidity of rupee notes because its value is guaranteed by the central bank – hence not in the bank’s balance sheet – and can be used to make bank transactions, payments online instead of credit or debit cards.
Interestingly, but not too much, the countries that represent the heart of the financial system (above all the United States, Europe) continue to be at the forefront of carefully evaluating the advantages and disadvantages of the financial system and the functioning and stability of the real economy. In Europe, it is estimated that it will take four years due to the difficulty in uniting countries with different priorities. Digital Euro In our pockets. The reason for this precaution is that its introduction could drastically change the balance of the financial system, especially the suspension of banks that have low deposits on the balance sheet of banks and consequently increase the cost of borrowing. . Instead developing countries are running. There Bank for International Solutions In this connection a survey was conducted of their activities in twenty-six developing countries, of which only two countries do not plan to issue digital currency in the future, and many countries – especially in the Middle East and Asia – are rather advanced. Pioneer development of projects. A strike case has been cited by the Bahamas Central Bank, which made its digital currency (sand dollar) available to the public in October 2020.
There are more than one reasons for planning to publish digital money in developing countries. First, the use of money is declining, while digital payments through private systems (such as credit cards or utilities) are increasing, leading to a loss of central bank centrality in managing aggregates. In monetary and, therefore, in controlling the economy. The second reason is that the digital currency will support the inclusion of a large part of the population in the financial world. It is estimated that 1/3 of the world’s adults do not have a bank account, 50% more in Africa and 40% in Latin America, but many of them have a mobile phone so they can create one. Money. Digital. If the digital currency, combined with the campaign to reduce the digital segment, can bring a segment of the population closer to the financial world. A third reason, which is closely related to this concept, is that the costs of payment services, which are very high in these countries, may increase competition and efficiency in the payment system sector as a central bank reduces its costs.
We see in the key points of the central banks: operational problems, intermediate, low level adoption. The East Caribbean central bank’s pilot project was the first to raise concerns about both infrastructure disruptions (operational risk) and the risks of cyber attacks that occurred in January. The intermediate issue of banks, which may be reflected in the reduction of debt to the economy, is particularly at the center of attention for its consequences in times of crisis. To overcome the problem, it is assumed that controlling the size of the own digital currency. With regard to adoption, the theme is to design the digital currency in a way that is acceptable to a wider audience of citizens and businesses.
Experience in the field of developing countries helps to understand the direction in which the design of the digital currency is heading and to clear a sector that is most critical to achieving hypotheses and goals.
First, when banks take care of the user interface, almost all tests point to the direction of a two-tier system with the central bank, including the provision of infrastructure and the provision of currency. It is therefore excluded that the Central Bank acts directly as a bank for the citizens.
There is still no clear direction before the name of the digital currency is known. Cash payments are as anonymous as they are made through bank circuits. Whether digital currency transactions should reflect this is still an open question – China – but the Bahamas – by choosing to remain anonymous to finite value transactions and have a full track record of significant amount transactions. Although there may be some sort of limitations to having digital money before the architecture (centralized or decentralized by a blockchain) as well as digital money, there is still no clear choice of field. Money will be introduced to control any banking failure.
Ensuring the mobility of the digital currency with other private payment systems seems to be a priority (the possibility of converting the digital currency deposited in current accounts or through other systems), a technical aspect that marks the success of the test. Presents more than one difficulty. Another aspect that emerges from experience in this sector is that without providing the payoff of digital currency, central banks do not want to complicate their lives too much. By doing so, the digital currency will be closer to the currency and will not be charged to compete with the deposit.
The experience of central banks in developing countries shows that certain features of the design of the digital currency will be important in promoting fundraising: the availability of currency offline, compatibility with the latest generation of non-mobile phones, and low cost. For alternative payment tools, the opportunity to load the user online.
Experiments in the field of digital currency continue, wiping out various hypotheses on the ground, with the hope that Europe (or Eurozone countries) will and will not treasure this experience. Too late.
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