Sunday, May 26, 2024

CBDCs in 2022: New Trials and Crypto Competition

Central bank digital currencies or CBDCs have been gaining some traction in recent years. Almost 85% of central banks are planning some initiatives like early-stage pilots, relevant research, and even plans to launch their digital currency. Most of them are proceeding cautiously and slowly. The reason could be the risks associated with a CBDC. These digital currencies may not come up or get used widely if the central banks cannot figure out how to prevent and control those risks.

Several Options with Central Banks

They have several options when it comes to technological infrastructure, monitoring characteristics and management of CBDCs. Their planned digital currencies can be built on the back of present financial infrastructure or a blockchain network. Things become more complicated by the fact that a digital currency can be launched by a central bank in association with other banks and companies. The next step will require determining the various features of the currency. Central banks have to decide their digital currency’s value and allow applications.

More Research Needed

The launching of a CBDC involves determining all these things and more. Its future role in the commercial payment and banking sectors must be determined in advance. Because of these numerous variables in developing and deploying a CBDC, more research and experiments are needed. It is unlikely 2022 will see a full launch of any CBDC. China has launched its digital yuan e-CNY in a limited way. Observers want to wait at least a year to see how it progresses.

Overall, it is unlikely that paying with a CBDC for a cup of coffee can become commonplace soon. Consumers have to wait at least a few years before they are able to use a state-backed digital currency for retail payments.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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