CBDCs? Central Bank Digital Currencies… Central banks worldwide are looking at digital currencies as a great new future. Instead of letting citizens move to bitcoin or other cryptocurrencies, have ours. Well, that’s the idea anyway.
China was leading the way here, and has trialled a digital yuan. To encourage people to use it, the trail state gave away 10 million yuan (around $1.5 million) which, by the start of this month, had encouraged $300 million of spending across four million transactions.
… Christine Lagarde’s first action as the new head of European Central Bank is to talk about a digital euro: “A digital euro would be an electronic form of central bank money accessible to all citizens and firms – like banknotes, but in a digital form – to make their daily payments in a fast, easy and secure way. It would complement cash, not replace it.”
… Mind you, a digital euro could be tracked and traced to whoever used it, unlike cash. Cash still has that anonymity which… is missing from any digital activity… So, it will be interesting to see what happens in the Bahamas… The first country in the world to issue a digital currency nationwide.
The Bahamas has issued a sand dollar or B$, which is the first CBDC out there in the wild. It is pegged to the USD so, in effect, this can be seen as a pilot release of a digital USD by proxy…
Why does the Central Bank of The Bahamas think we need this? To advance more inclusive access to regulated payments and other financial services for under-serviced communities and socio-economic groups as well as to reduce service delivery costs and increase transactional efficiency for financial services across the Bahamas.
What is Cryptocurrency? Cryptocurrency is a virtual medium of exchange that is encrypted and transmitted over distributed networks independent of any centralized entity.
What is the difference between Central Bank Digital Currency (CBDC) vs. Bitcoin and other Cryptocurrency? Central Bank Digital Currency is a centralized, regulated, stable, private and secured unit of account and means of exchange; whereas, Bitcoin (along with other cryptocurrencies) is decentralized, unregulated, volatile in value (exchange market traded), public and unsecured unit of account and means of exchange.
Is this a cryptocurrency like Bitcoin? No, Central Bank Digital Currency is issued and regulated by Central Bank of The Bahamas and shares the same monetary stability as the Bahamian fiat.
… Meanwhile, if you’re wondering who’s next, Cambodia is most likely the next country to issue a national digital currency.
[CryptoCurrency, DigitalAssets, DLT]