90% of Central Banks are researching the utility of CBDCs

Please fol­low and like us:
Pin Share

In a new annu­al eco­nom­ic report pub­lished by the Bank of Inter­na­tion­al Set­tle­ments (BIS), the finan­cial insti­tu­tion revealed that approx­i­mate­ly 90% of cen­tral banks world­wide are inves­ti­gat­ing the fea­si­bil­i­ty of adopt­ing cen­tral bank dig­i­tal cur­ren­cies, or CBDCs.

The BIS report high­light­ed the abil­i­ty of cur­rent sov­er­eign fiat mon­ey to pro­vide (rel­a­tive) price sta­bil­i­ty and pub­lic over­sight while crit­i­ciz­ing cryp­to’s inabil­i­ty to per­form “basic fun­da­men­tal func­tions of mon­ey” and their opac­i­ty with regards to account­abil­i­ty to the gen­er­al public. 

How­ev­er, the report did high­light cryp­to’s pro­gram­ma­ble nature as well as the bor­der­less ele­ments of decen­tral­ized finance (DeFi) as poten­tial ben­e­fits that would make a case for inte­gra­tion into CBD­Cs. There are cur­rent­ly three live retail CBD­Cs with 28 pilots. The dig­i­tal yuan issued by the Peo­ple’s Bank of Chi­na cur­rent­ly holds the dom­i­nant posi­tion with 261 mil­lion users. In addi­tion, over 60 juris­dic­tions have fast retail pay­ment systems.

In mak­ing a case for the use of cen­tral­ized dig­i­tal assets, BIS cit­ed recent adverse devel­op­ments in the DeFi sec­tor. One such exam­ple in the report is the implo­sion of Ter­ra (LUNA) — now renamed Ter­ra Clas­sic (LUNC) — and Ter­ra USD algo­rith­mic sta­ble­coin. Next, BIS went on to high­light the lim­it­ed scal­a­bil­i­ty of cer­tain blockchains, such as Ethereum (ETH), caus­ing net­work con­ges­tion and there­by sharp increas­es in trans­ac­tion fees.

It also raised the ques­tion of the fea­si­bil­i­ty of layer‑1 solu­tions due to the sig­nif­i­cant frag­men­ta­tion of such blockchains to address such draw­backs. Final­ly, the report point­ed to a record amount of cryp­tocur­ren­cy hacks in the past year as part of dig­i­tal assets’ inher­ent safe­ty risks.

Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *