80 central banks will adopt the CBDC
“We believe it is our duty to have digital currencies available that would work for the benefit of consumers,” Lagarde said at a press conference, adding:
“So what would that be like?” Well, it could be used like banknotes. I don’t think it’s like banknotes because it won’t have the degree of anonymity that banknotes have.
In discussions with consumers who responded in large numbers, Lagarde noted that many made the following remark: “We want our privacy to be protected, but we don’t want anonymity because we realize the risk of it. ‘anonymity’.
Studies of central bank digital currencies began in China as early as 2014, with Sweden leading the discussion on what an electronic crown, electronic euro, or electronic dollar can look like.
The function of commercial banks as safe custodians of deposits can be compromised if central banks give everyone access, the design now changes to resemble the current system, in which central banks issue money to commercial banks, who then distribute it to the general public.
The public, as now, would be able to access their digital currency through a banking app, only banks being likely to provide that specific digital currency app, and therefore the digital currency itself would remain in the banking system, although some banks may experiment with self-guarding portfolios.
For there to be additional public benefits, coders in particular would need to be able to publish their smart contracts on this banking blockchain, enabling automated funding and things like NFTs, which would require the creation of a public blockchain, although not controlled by the public like Bitcoin.
Related article | US Congress Creates New Crypto Task Force to Tackle Blockchain Regulation, CBDCs, and More
From a technical point of view, only confidentiality issues would remain, as the central bank and commercial banks would have a complete view of all economic activities. However, such concerns can be addressed by allowing self-depository wallets to generate their own bank chain address and connect to the bank chain network using Simple Payment Verification (SPV) wallets, just like the does Bitcoin.
Digital bank coins and bitcoin would then compete in monetary terms, with bitcoin having a fixed supply and fiat coins having a controlled quantity.
With the exception of limited experiences in China, where no self-custodial wallets are allowed for the electronic yuan, which also lacks publicly publicly available smart contracts, digital currencies are still in their infancy, with ongoing design discussions.
According to early user feedback, the design of the digital yuan is similar to that of contemporary digital banknotes, and therefore, it is generally disappointing.
Related article | Bank of Japan to start experimenting with CBDC
Featured Image from Pixabay, Charts from TradingView