CBDCs are digital representations of fiat money that central banks have issued and are in charge of. They are meant to provide the same functionality as cash while adding the advantages of electronic payments. For instance, CBDCs could track and trace transactions and make quick, inexpensive payments.
Why are Central Banks interested in Digital Currency?
Here are some of the potential benefits of CBDCs for individuals:
- Easy and Convenient: CBDCs could make paying for things easier and more handy. CBDCs could be used, for example, to pay for things online, in shops, or even in person.
- Cost Effective: Costs could decrease if CBDCs were used to make payments. This is because central banks would be responsible for issuing and managing CBDCs. This would eliminate the need for intermediaries like banks and payment processors.
- Better access to money: CBDCs help make access to money better. This is because people who don’t have bank accounts could use CBDCs.
Overall, it is still hard to say how CBDCs affect your funds. But they could make it easier and cheaper to pay for things, and they could also help more people get access to money.
What does the BIS Survey Indicate?
According to a Bank for International Settlements (BIS) survey, 24 central banks are working on or trying central bank digital currencies (CBDCs). The BIS said that CBDCs could greatly affect the world’s banking system.
The most popular reasons for central banks to look into CBDCs, according to the BIS survey, are to:
- CBDCs could help keep the economy safe by lowering the risks that come with the rise of private digital currencies like stablecoins.
- CBDCs could make it easier for people, especially those who don’t have bank accounts, to use financial services.
- CBDCs could help make the payments system more efficient and safe.
CBDCs are important to the world financial system, so their growth is important. How CBDCs will be used, and their effects are still unknown. But CBDCs could change how we pay for things and deal with the financial system.
Here are a few of the most important things to learn from the BIS survey:
- The BIS found in 2021 that 16 central banks were looking into CBDCs. The number has gone up to 24 in 2022.
- Most of the time, central banks look into CBDCs to stabilise the economy, give more people access to money, and update the payments system.
What does this mean for you?
If you are interested in the future of money, keep an eye on the development of CBDCs. CBDCs have the potential to change the way we pay and the way we interact with the financial system. It is important to understand how CBDCs work and what impact they could have on your finances.