Cryptocurrencies such as Bitcoin, Ethereum, Stellar, XRP, Cardeno were quite immature in the economy a few days ago. But the popularity of this type of currency is increasing day by day. It started with Bitcoin. Then came the advent of more and more digital currencies. Peer-to-peer money transactions, where there will be no bank as a third medium and no need for paper money, the world is moving towards such a hassle-free financial system. However, in some countries, currency processes like Bitcoin have been made illegal. In our country too, trading in such currency is legally prohibited.
Because the central bank has no control over who, where, when, how, how much money is being transacted in this process, how much income is being generated, the cryptocurrencies have not received legal recognition from the central banks. However, some countries in the developed world are going to lean towards such monetary system. In their opinion, it is wise to keep pace with technology over time. Economically stable countries, from Singapore to Sweden, have begun to think about whether it would be right to adopt these blockchain-dependent currencies. Their purpose is to find out if cryptocurrency transactions can be arranged in addition to the current conventional financial transaction system and whether such a move should be initiated.
Not that these countries are already leaning towards digital monetary systems. Management will need to be more rigorous to implement this system and will need adequate guidelines. But a week before the G20 summit, the International Bank of Settlement prepared a report, in which some of the details on how to implement the digital currency have been prepared by the central bank officials of different countries of the world.
Central Bank Digital Currency (CBDC) - One has to be careful while explaining it. Because the matter is a little sensitive economically. The current monetary system is done with paper notes, or rather through an online process. There are other commercial banks in a country where customers open certain accounts for their transactions and they are controlled by the central bank. All transactions of the bank are being monitored by the central bank - whether it is on paper or online.
Two things can happen if CBDC is implemented. Either it will be more readily available, or it will be subject to much more restrictions. If CBDC is implemented and much more available, then anyone can open their identity in the central bank.
Central banks are planning to allow peer-to-peer money transactions from under the control of the banking system. But here are some new things they are going to add, that is, the transactions are much more personal, but it can be quickly noticed whether there is a suspicious transaction. Their goal is to bring technology to the attention of the people as well. They want to use the technological speed of digital currency.
But even with the introduction of such currency, they are not completely obliterating the intervention of the central bank. It is quite natural that if the transactions are not monitored, huge changes (maybe worse) will come in the country's economy. The transaction is much more private and will not be disclosed - how to calculate the interest or profit, how to meet the needs of the general public is still a matter of concern. Studies and research are needed to make decisions on these issues.
The report highlights how CBDC's financial transactions will be conducted, how financial coherence and stability will be maintained if it is implemented, and how the economic policy of this digital currency will be determined. Only when money transactions skyrocket will digital currency become much more accessible and attractive.
In Sweden, some risk banks have taken the initiative to launch a financial transaction called e-krona. Only small transactions can be made with this digital currency. It has also been used only for transactions between banks. Swedish officials have been very keen on this new initiative, and have concluded that the benefits of using digital currency are far greater. Money is still more popular in many countries than card transactions.
But it is not just the central banks that keep a close eye on financial transactions or the transactions of other banks. They have to focus on various economic activities for the welfare of a country and formulate new policies accordingly. Of course, money is involved in all their activities, but it is difficult to say how reasonable these cryptocurrencies are in the transactions they have to go through in the public interest.
The various policies or rules of the central bank are a matter of confidentiality. If you want to get any digital service, you have to be sure about its security first. It is much more important to think about how secure the information of the general public will be when cryptocurrency becomes a dependent state. The question remains as to how secure the confidentiality of the inside news of that country will be through foreign loans or foreign transactions through cryptocurrency.
Now those who are keeping their money safe in the bank, using cryptocurrency will not get that benefit. Because there will be no account in the transaction. If there is a wrong transaction again, there is no possibility of getting it back. Blockchain keeps an account though.
Anything digital can be a victim of hacking. Money management is now seen to be looting central bank money through hacking, despite having control. When it comes to cryptocurrency, everything is digital, ie through computers and online, there is no compromise with the issue of security.
The central bank now oversees the commercial banks in the transaction system. If cryptocurrency is implemented, the cost of these banks will increase a lot because then they will have to compete with the central bank to survive.
Now the thing that the heads of the central banks are most worried about and where all their thoughts have become one is the privately-owned cryptocurrency. Because they think it's a lot like gambling and they're expecting a lot more advice from economists and finance managers.
Thanks to everyone for reading My article