Written in CRYPTO he
The central banks have worked to keep up to date and thus be able to compete with the cryptocurrencies that saw their origin 14 years ago, thus opening the way for the adoption of coins digital issued by these traditional institutions. However, this has advantages and disadvantages that we are going to tell you about in this note.
Are digital currencies a benefit or a risk for the economy of a nation?
A bank central It is the institution responsible for the monetary policy of its country, that is, among its functions is to mint the coins and print the tickets that citizens will use. Currently, 11 central banks have decided to adopt and issue a currency digital (CBDCfor its acronym in English) with which you can make various transactions.
In the particular case of our country, the Bank of Mexico (Banxico) is working to put into circulation a CBDC in 2024, for this they are developing a platform that can help in its implementation, and is similar to the SPEI clearing and settlement infrastructure.
Benefits of digital currencies
A CBDC retail can be used like cash, but with the advantage of being able to make instant transfers regardless of people’s geographical location. Additionally, according to James Wallis, vice president of Partnerships with Banks power stations and CBDC of Ripple, implementing foreign exchange digital it can help to improve financial inclusion, since payment infrastructure can be improved, that is, direct person-to-person payments become faster and more efficient, while reducing costs and failure rates.
“Despite these benefits, most central banks are wary of seeking real-world initiatives. Everything from how people pay bills and buy food to how business is conducted and governments are run depends on a stable financial system. The initiatives of CBDC pose many challenges for banks centralwho must balance the desire for transformation with the need to maintain stability on a global scale,” Willis said.
In this way the banks central can retain political sovereignty monetarypreventing cryptocurrencies from dominating the market.
Risk of digital currencies
However, the implementation of these foreign exchange digital you should be wary, as if you are not allowed broad access to operability and functionality, you risk losing control of the infrastructure for global digital currencies. In other words, in the event of a rumor or bad economic situation where a large number of clients decide to withdraw their money simultaneously and take refuge in the banks central, excluding commercial banks, would significantly reduce the intermediation of these institutions. In addition, the lack of privacy and existing cybersecurity risks, such as money laundering and identity theft, still need to be addressed.