Jason Simon details how cryptocurrency and CBDCs are advancing around the world

The advance of digital currencies is imminent, although they are still considered a niche product by international banking authorities. However, central banks are beginning to explore their regulation. According to a survey conducted by the Bank for International Settlements (BIS), 86% of the 65 central banks included in the study are currently experimenting with the benefits or drawbacks of managing these assets, but in any case, the exploration is taking place in the field of their own digital currencies (Central Bank Digital Currencies, or CBDCs). Jason Simon, an expert in the field of eCommerce and cryptocurrencies, gives a detailed explanation of what has been the influence and advancement that cryptocurrencies currently have in the world.

CBDCs are central bank-issued money denominated in the national unit of account and represent a central bank liability. Although posed as a new option for the general public to “hold money,” they would be different from existing forms of cashless payment instruments, credit transfers, card payments and eMoney, in that they would represent a direct claim on a central bank, rather than a liability of a private financial institution.

These digital currencies would also be distinguished from digital cryptocurrencies such as Bitcoin or other private tokens. It has been detailed that 60% of central banks are conducting experiments or proofs of concept, compared to 14% moving towards development agreements and pilots. Simon explains that “countries with emerging economies report greater motivations to issue cryptocurrencies than countries with advanced economies, largely because of the financial inclusion and financial stability that these currencies could drive.”

For countries with advanced economies, the main motivations for exploring digital currencies center on the efficiency and security of payments they could offer. Despite clear intentions to move towards digital currencies, most central banks lack clarity around the legal authority to issue these currencies and only a quarter of the central banks included in the survey have clarity around these regulations. It also points out that a very solid and unambiguous legal framework is needed prior to the issuance of a CBDC by any central bank.

During a recent Hoover Institution Policy Seminar, it was pointed out that central banks must guarantee the stability of the value of digital currencies, the elasticity of the aggregate supply of this money and ensure its supervision and security of operation of the system. Reference was also made to privately issued digital currencies or tokens, pointing out that they are not separate currencies to the existing financial system.

“Bitcoin was originally intended to be an alternative payment system without the intervention of the authorities. It has turned into a kind of bubble and a Ponzi scheme, i.e., a fraudulent investment operation involving interest payments to investors from their own invested money or from the money of new investors,” Simon adds.

The survey exploring the use of CBDCs points out that private cryptocurrencies are still considered niche products without widespread use as a means of payment, but admits that in 2020 they experienced an increase in their values due to speculation. For Simon, the increase in interest in cryptocurrencies has a lot to do with the fact that many people began to consider them as a safe destination for their investments, so it is important for private banks to explore the incorporation of these currencies.

“A clear example is Booking.com, the search portal for preferential travel booking costs has adopted payment with cryptocurrencies. Also, several months ago, the mayor of Miami proposed to collect taxes in Bitcoin and at the beginning of February, the oldest bank in the United States, Bank of New York Mellon, created a division of digital assets so that its customers can invest, custody and transfer them,” Simon concludes.

Related Post

  • bitcoinBitcoin (BTC) $ 64,671.00 5.01%
  • ethereumEthereum (ETH) $ 3,108.37 3.63%
  • tetherTether (USDT) $ 0.999767 0.03%
  • bnbBNB (BNB) $ 559.56 2.31%
  • solanaSolana (SOL) $ 143.87 9.64%
  • usd-coinUSDC (USDC) $ 1.00 0%
  • staked-etherLido Staked Ether (STETH) $ 3,105.09 3.55%
  • xrpXRP (XRP) $ 0.500858 1.92%
  • the-open-networkToncoin (TON) $ 7.16 19.33%
  • dogecoinDogecoin (DOGE) $ 0.152225 5.08%
  • cardanoCardano (ADA) $ 0.461808 4.15%
  • shiba-inuShiba Inu (SHIB) $ 0.000023 4.2%
  • avalanche-2Avalanche (AVAX) $ 35.43 4.01%
  • wrapped-bitcoinWrapped Bitcoin (WBTC) $ 64,658.00 4.94%
  • bitcoin-cashBitcoin Cash (BCH) $ 484.03 0.75%
  • tronTRON (TRX) $ 0.108883 0.65%
  • polkadotPolkadot (DOT) $ 6.79 2.54%
  • chainlinkChainlink (LINK) $ 13.81 5.01%
  • matic-networkPolygon (MATIC) $ 0.674669 1.65%
  • nearNEAR Protocol (NEAR) $ 5.77 4.72%
  • internet-computerInternet Computer (ICP) $ 13.31 10.78%
  • litecoinLitecoin (LTC) $ 81.01 0.27%
  • uniswapUniswap (UNI) $ 7.64 9.64%
  • leo-tokenLEO Token (LEO) $ 5.85 0.12%
  • daiDai (DAI) $ 0.999484 0.01%
  • aptosAptos (APT) $ 9.53 4.17%
  • ethereum-classicEthereum Classic (ETC) $ 26.16 2.73%
  • mantleMantle (MNT) $ 1.16 3.94%
  • first-digital-usdFirst Digital USD (FDUSD) $ 1.00 0.02%
  • blockstackStacks (STX) $ 2.45 5.71%
  • filecoinFilecoin (FIL) $ 6.13 4.66%
  • okbOKB (OKB) $ 55.26 0.62%
  • crypto-com-chainCronos (CRO) $ 0.123681 1.97%
  • stellarStellar (XLM) $ 0.112593 4.44%
  • cosmosCosmos Hub (ATOM) $ 8.29 2.61%
  • renzo-restaked-ethRenzo Restaked ETH (EZETH) $ 3,141.35 3.86%
  • render-tokenRender (RNDR) $ 8.04 4.77%
  • bittensorBittensor (TAO) $ 463.25 3.41%
  • arbitrumArbitrum (ARB) $ 1.16 2.2%
  • immutable-xImmutable (IMX) $ 2.07 8.77%
  • vechainVeChain (VET) $ 0.040983 7.35%
  • hedera-hashgraphHedera (HBAR) $ 0.082853 4.74%
  • makerMaker (MKR) $ 3,023.30 3.16%
  • kaspaKaspa (KAS) $ 0.117221 1.43%
  • dogwifcoindogwifhat (WIF) $ 2.71 15.27%
  • injective-protocolInjective (INJ) $ 28.29 10.95%
  • the-graphThe Graph (GRT) $ 0.261338 7.92%
  • ethena-usdeEthena USDe (USDE) $ 1.00 0.12%
  • optimismOptimism (OP) $ 2.26 3.43%
  • wrapped-eethWrapped eETH (WEETH) $ 3,221.15 3.87%