 The CBDC revolution is on the verge of happening, but the impact on bitcoin is still uncertain The Central Bank Digital Currencies (CBDC) revolution is on the verge of happening, as virtual coins issued by major economies are likely to see the light in the next decade. But what their impact on bitcoin will be is still uncertain. Rather than overtake bitcoin, CBDCs would likely push the cryptocurrency’s price higher, explains Nigel Green, the founder and CEO of deVere Group – an independent financial advisory, asset manager and fintech organisation. However, according to a Guardtime report, consumers and banks look increasingly receptive to the launch of digital currencies by central banks and governments. Pro-bitcoinCentral banks would, as matter of fact, validate the concept of cryptocurrencies, thereby adding further legitimacy to the market. As there is no single authority and a progressively limited supply, CBDC could push demand for cryptos higher. Last but not least, CBDCs would be digital, but not borderless in the same way as other cryptocurrencies are, Green explains. According to Green, CBDCs could be appreciated by younger generations as they would be run by old institutions, while bitcoin and other cryptos are "controlled by no one – discussions are held out in the open, and decisions are transparent and community-based”. The deVere CEO concludes: “The Bank of England’s reported move to set up ‘Britcoin’ highlights that digital currencies are the inevitable future of money.” Pro-bitcoin and other CBDCs A study across 10 countries – including major European and Asian economies, plus the US and the United Arab Emirates – found that 64% of adults would be likely to use a digital currency launched by their country’s Central Bank and Government, with 33% saying they would be “very likely to use one”. Just 10% of those questioned said they would never use a CBDC. “People worldwide have embraced rapid digitisation during the COVID-19 crisis, and that appears to be reflected in the relative enthusiasm for the launch of digital currencies from central banks,” says Luukas Ilves, Guardtime’s head of strategy. Guardtime believes the introduction of CBDCs could upend the global economic order. This technology could bring a multitude of benefits such as more efficient trade, greater financial access for millions of people and a reduction in crimes. However, there are important technological barriers to overcome regarding scalability and security. CBDCs around the worldThe launch of a major CBDC may not be that far away. Research from the Bank of International Settlements (BIS) shows that 86% of central banks are actively researching the potential, while 60% are experimenting with the technology and 14% are deploying pilot projects. While the US Federal Reserve still calls it “hypothetical”, the colossal challenge to China’s digital yuan has already started in the UK and Europe. With an eye on the dispute between the digital renminbi and the US dollar, the Bank of England and the European Central Bank are paving the way for ‘Britcoin’ and eurocoin. But the first nation to follow hard on the heels of China is actually in the Caribbean sea: The Bahamas. “[With] The Bahamas’ issuance of the ‘Sand Dollar’ and China’s experiment with the ‘digital yuan’, digitalisation is changing our understanding of what a ‘currency’ is and how it operates,”said Tobias Adrian (pictured), financial counsellor and director of the International Monetary Fund’s Monetary and Capital Markets Department, in a speech presented at the Bank of Russia’s 29th International Financial Congress.  In-depth: benefits and risks of CBDCs But, as Adrian well knows, there are many potential benefits of CBDC, along with several likely risks. “CBDC has the potential to make payment systems more cost-effective, competitive and resilient. In countries that have large numbers of unbanked people, it could help enhance financial inclusion,” he said. ”CBDC can finally be leveraged to improve cross-border payments, which are now often slow, costly, and not easily accessible.” Commenting on the dark side, Adrian continued: “There could be potential banking-sector disintermediation. Deposits could be withdrawn, perhaps abruptly, from commercial banks, if people decide to hold CBDCs in significant volume. “Banks would then have to raise interest rates on deposits to retain customers, or they would have to offer better payment services. Banks could experience compression of margins, or they could have to charge higher interest rates on loans. “There is also a potential reputational risk for central banks. Offering CBDCs requires central banks to be active along with several steps of the payments value chain. The failure to satisfy any of these functions – whether it is due to technological glitches, cyber-attacks, or simply human error – could undermine public faith in the central bank’s operations. “Finally, there are macro-financial risks that can occur with the cross-border use of CBDCs. For the CBDCs of reserve-currency countries, which are available across borders, there could be an increase in currency substitution (or “dollarisation”) in countries with high inflation and volatile exchange rates.” But these are just a few of the issues, as meanwhile governments are already tackling policy-related work converning privacy, regulations, and security.  CBDC projects around the world: The Bahamas experience
“The Sand Dollar will soon serve as a standard means of payment collection through the DigiPay platform for government services. This step is a historic achievement, which signals the government’s commitment to building and expanding the sand-dollar ecosystem across the Bahamas,” said Kwasi Thompson, The Bahamas’ minister of state for finance. “Work on this project started during the ’90s. Next September, all the citizens will have the possibility to pay their bills in Sand Dollar,” he added. It’s a long way to the top: the US ‘hypothetical’ Project Hamilton‘Project Hamilton’ – the name is a tip of the hat to Alexander Hamilton, the American Founding Father who laid the foundation of the US Federal Reserve (the Fed) with the Federal Reserve Bank of Boston, aka the Boston Fed. In February 2021, together with the Massachusetts Institute of Technology’s (MIT'’s) Digital Currency Initiative, the Fed created a task “to inform policymakers by building a hypothetical platform that’s fast, resilient, secure and private enough to support a US-backed central bank digital currency”. The Boston Fed and MIT have since structured the research collaboration into various work phases. The first phase will involve joint building and testing of a hypothetical CBDC for wide-scale, general-purpose use. In later phases, researchers will assess technology trade-offs by coding and testing various architectures to see how they impact the CBDC’s design goals. In parallel to the work with researchers at MIT, the Boston Fed: “will independently evaluate other systems to understand their potential pros and cons in supporting a central bank digital currency. Before any CBDC could be issued, a separate, extensive policy process would be required.” Britcoin The Bank of England (BoE) and Treasury announced the joint creation of a CBDC Taskforce in April to coordinate the exploration of a potential UK CBDC. “It would exist alongside cash and bank deposits, rather than replacing them, for use by households and businesses,” said a BoE representative. The government and the BoE have not yet decided on whether to introduce a CBDC in the UK, and will engage with stakeholders on the benefits, risks and practicalities of doing so. “The Taskforce aims to ensure a strategic approach is adopted between the UK authorities as they explore CBDC, in line with their statutory objectives, and to promote close coordination between them,” the BoE added. Eurocoin The governing council of the European Central Bank (ECB) has decided to formally launch a project to get ready for the possible issuance of a digital euro. The ECB will commit the resources necessary to design a marketable product. But a decision about whether or not to issue a digital euro will only come at a later stage. And, in any event, a digital euro would complement cash, not replace it. “The eurosystem will drive this project forward with the necessary degree of caution, inherent in our mandate to provide stability – both monetary and financial,” said Fabio Panetta, member of the Executive Board of the ECB as he announced the launch of the project. Panetta added: ”But we will not shy away from writing this new page of European progress.” Australian digital coin Australia’s central bank said in November 2020 that it was launching a project to explore the potential use and implications of a CBDC. The project will involve the development of a proof-of-concept for the issuance of a tokenised form of CBDC that can be used by wholesale market participants for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based distributed ledger technology (DLT) platform, Reuters reported. Chinese digital yuan “There was no choice but to be pioneers,” says the US motto, however in 2020, China was first to launch its digital yuan – also known as e-CNY, digital RMB or Digital Currency Electronic Payment (DCEP), all forms of virtual Chinese renminbi – as a legal tender. According to experts, the digital RMB could provide a cheaper and more practical alternative to international transactions outside the US-led global financial system, especially for countries with strong ties to China, thereby representing a challenge to the US dollar. The actual yuan chain coin price is $0,01139, with a trading volume of $163,033.55, or 31,84%, market rank #3152...(Source:CurrencyCom). Tells us what your thought by filling the comment section below . Trade Cryptocurrency and Forex with Cryptocurrency Com Broker !
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