It is no longer news that developed and developing countries are working together with their central banks in the development of central bank digital currencies (CBDCs). This is claimed to be geared towards sustaining a cashless policy in their various countries.
Thanks to the global lockdown caused by the COVID-19 pandemic, cashless transactions have been on the frontline of banking activities. From cashless transfers to pre-orders, to online payments, to even digital currency transactions, the cashless policy has been a trend on its own.
Reasons for Implementation
As nothing happens without reason, CBDCs are also not to be developed in the light of ignorance of what they are meant for. Most developing-economy countries are said to be developing their CBDCs for the sole aim of boosting their countries’ economies as well as ensuring that citizens tend to experience an improved standard of living. The CBDCs are predicted to help countries of this caliber set up a controlled circulation of resources among their citizens.
On the other hand, developed-economy countries claim that the implementation of CBDCs will allow room for efficient inter-bank transactions and develop functioning capital markets. The need for a fast and reliable transaction experience is also responsible for the move being made.
We can deduce that CBDCs are to be implemented based on the requirements of their various countries. Since the human population’s welfare is concerned, the initiative seems to have been shown a green light. However, the big question remains the same; what kind of CBDC do we require globally?
Blockchain technology is the rave of the moment in banking technology. It involves peer-to-peer transactions, users’ anonymity making transactions, fast and reliable networking, and the value of digital assets using its technology.
However, the adoption of CBDCs seems to be a self- centered move as each central bank will tend to cater to its country alone.
Transparency, reliability, and affordability must be considered when attempting to implement a CBDC that meets the world’s requirements. The CBDC to be created must solve the problem of international transactions, particularly the payment network.
The world can achieve effective interconnections between all CBDCs to be created if all central banks join hands and contribute their quota towards creating a CBDC based on joint administrative leading.
We believe that this will help improve the welfare of the entire human population across the globe.