BIS Blesses CBDC Development in 56 Countries
During the earliest years of the crypto boom, Bitcoin was only seen as criminal money that had no actual value to society. Now, with the total crypto market cap reaching $2.3 trillion in May, digital assets are making waves in global finance.
As regulation surrounding the new asset class continues to be discussed, some governments are deciding that offering their own cryptocurrency is the best route to embracing the revolutionary blockchain technology.
The Bank for International Settlements Supports CBDCs
The Bank for International Settlement (BIS) is essentially the central bank for the world. Recently the BIS has been heavily discussing how cryptocurrencies should be integrated into world markets. The BIS has expressed its full backing for countries developing CBDCs. Many governments are already ahead of this announcement, as there are already 56 known countries putting efforts towards developing a state-run digital currency.
In addition, the BIS voiced warnings that big tech may try to implement their own digital currencies if countries do not act soon. With large tech companies having such a large following, it would be easy for them to quickly grow their currency. This would rival government-backed money, making widespread CBDC acceptance more difficult. An example of this was Facebook’s Libra project.
The implementation of CBDCs is probably the largest monetary development in history. With it comes various benefits such as ease of use and security. In addition, governments will be able to precisely track every aspect of their currency—this will be beneficial in that central banks will theoretically be able to implement perfect monetary policy.
On the flip side, CBDCs will bring a lack of privacy for individuals using the currency. If the currency is not anonymous, every transaction will be visible to authorities.
This will be beneficial for curbing illegal activities, but does seem a bit disheartening that there could be little to no privacy of purchases. Moreover, if a corrupt state decides to implement very high taxes, there will be nowhere to run in a CBDC-dominated monetary landscape—not to mention that the government will have the ability to freeze anyone’s funds in a matter of seconds.
These Countries are Working on CBDCs
There is a long list of countries researching and developing their own CBDC. In addition, there are nations that have already deployed state-run digital currencies. All spotlights are on these experiments as central banks plan their CBDC implementations.
After a successful testing phase in 2019, the Bahamas was the first country to implement their CBDC, the Sand Dollar. More recently, China is working to integrate its digital yuan into its banking network. In addition, banks in France and Switzerland are two key players currently testing the functionality of a CBDC.
Many other countries are researching the possibility of offering a CBDC. With BTC gaining momentum quickly, it would not be surprising to see central banks move quickly surrounding their own digital currency.
On the other side of the development surrounding CBDCs, other countries are integrating Bitcoin into their societies. The first example of this was El Salvador making BTC legal tender just a few weeks ago. There is further interest from countries around the world concerning the use of bitcoin in their economy. With this growing rally behind Bitcoin, the successful execution of CBDCs may be difficult for governments.
The CBDC has the ability to completely change the way markets and society in general function. Will CBDCs be accepted by the general public, even if it takes away some of their privacy? Would you accept a CBDC in your country? Let us know in the comments.