Central Bank Digital Currencies (CBDCs) are very positive for the cryptocurrency industry but with a few caveats, says Changpeng CZ Zhao, Binance CEO. He expects most CBDCs to come with high fees, especially when it involves cross-border transactions.
Users will spend more time and money using CBDCs for cross-border transactions. But in comparison, cryptocurrencies will have lesser fees for such transactions and processes. Moreover, permissions will be involved. This means that a common man wanting to use CBDC needs permission to use their money. If the person wants to invest in a project in a foreign country, a lengthy process will ensue. In the end, it’s very much likely to be rejected.
This is a drawback. CBDCs’ permissioned nature means it will take time for it to get integrated into crypto exchanges. As such, CBDCs will not be like native cryptocurrencies. Binance believes that most CBDCs will have an unlimited supply, but is also cautioned about inflation.
The Atlantic Council, in a report in 2020, had stated that retail CBDCs can help remake the financial system more accessible to the unbanked and underbanked. Persons can have CBDC accounts directly through the central bank. They can access their money and deal through a digital wallet. People can use it as an alternative to traditional or fiat currency.
Binance highlights that cryptocurrency, and not CBDCs, have infinite potential. But the crypto exchange platform agrees that it’s better to have more crypto choices. With central banks across the world working to have their CBDCs, Binance cautioned against boxed-up rules and policies. For the crypto and blockchain market, freedom of money is the inherent principle.
