No Hurry, No Rush: Central bank digital currency?
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Just when we thought the idea of a central bank-issued digital currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More was gaining momentum, findings in the latest survey conducted by the Bank for International Settlements (BIS), unveils how central banks are in no hurry to issue a digital version of their currency.
The BIS, a global forum for central banks, conducted a study in relation to e-money with 63 central banks representing over 90% of global economic output and 80% of the world’s population. Results showed only five central banks progressing e-money pilot projects while the rest remained wary, warning investors on the risks of digital currencies in losing moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More on privately “minted” cryptocurrencies – like BitcoinBitcoin is commonly said to be a cryptocurrency, a digital means of exchange developed by a set of anonymous authors under the pseudonym of Satoshi Nakamoto, which began operating in 2009 as a community project (Wikipedia type), without the relationship or dependency of any government, state, company or body, and whose value (formed by a complicated system of mathematical algorithms and cryptography) is not supported by any central bank or authority. Bitcoins are essentially accounting entries i... More – which has proven to be no stranger to loss.
The risk, however, has not slowed the Riksbank’s e-Krona project, nor project Stella – a collaborative effort between the European Central Bank (ECB) and the Bank of Japan . Others are following suit like the Central Bank of Uruguay’s pilot program on digital banknotes as well as The Bank of England, Bank of Canada and Monetary AuthoritySee Central Bank More of Singapore also have a joint project.
Central Bankers recently raised the idea of Central Bank Digital Currencies (CBDCs) where even the International Monetary Fund (IMF) and its managing director, Christine Lagarde, expressed the potential role of states in issuing digital currency to supply money to the digital economy. Meanwhile, more than 85% of central banks say they are either unlikely or very unlikely to issue any type of digital currency in the next three years, whereas only one central bank said it was very likely to issue a digital version if its currency in the next six years, the BIS reports.
“At this stage, most central banks appear to have clarified the challenges of launching a CBDC but they are not yet convinced that the benefits will outweigh the costs,” the BIS said.
Digital currencies have, for a while now, been more than just a figment of one’s imagination. As to when it will fully take off into reality? We do not know. Until then, we can be rest assured that cashMoney in physical form such as banknotes and coins. More remains our lifeline throughout certain digital falls.
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