Saturday, September 30, 2023
  • Home
  • About Us
  • Privacy Policy
  • Contact Us
No Result
View All Result
Newsway
  • Home
  • Crypto News
  • Crypto Regulation
  • Business & Finance
  • Featured
  • NFTs
  • News
  • Loans
  • Opinion
  • Games
  • Beginner’s Guide
  • Technology
  • Home
  • Crypto News
  • Crypto Regulation
  • Business & Finance
  • Featured
  • NFTs
  • News
  • Loans
  • Opinion
  • Games
  • Beginner’s Guide
  • Technology
No Result
View All Result
Newsway

UNDERSTANDING THE CENTRAL BANKS DIGITAL CURRENCY: HOW IT WORKS

T.I UkendebyT.I Ukende
March 27, 2022
A A
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

UNDERSTANDING THE CENTRAL BANKS DIGITAL CURRENCY: HOW IT WORKS

News Credit: kindly visit withum.com for the original article.

With the rise of stablecoins in recent years, particularly in 2020, Central Banks have faced increases in pressure to find an efficient electronic alternative for money.

For context, a stablecoin is a cryptocurrency token that is pegged 1:1 to a fiat currency (i.e the U.S. Dollar) or commodity, such as Gold. Stablecoins are a useful tool to gain exposure to the digital currency marketplace as a useful on-ramp vehicle without the volatility exposure of such currencies as Bitcoin or Ethereum. Stablecoins have helped pave the way for Central Banks to gain an understanding of the digital currency industry and how they can go about creating and implementing their own version of digital money.

READ ALSO

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

September 28, 2023

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

September 28, 2023

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

September 28, 2023

What is Central Bank Digital Currency (CBDC)?

Central Bank Digital Currencies is the process of taking an existing monetary unit and making it digital. This monetary unit, which serves both as a medium of exchange and a store of value, is a mix of new and already existing forms of central bank money, which makes it somewhat challenging to clearly define what a CBDC is. As a result, a CBDC is a digital form of Central Bank money. Each CBDC unit acts like a secure digital instrument equal to paper-based currency that exists today.

By definition;

A Central Bank Digital Currency is electronic money that:

1. Can be easier to access than reserves,

2. Potentially has greater functionality for retail transactions than using cash,

3. Contains the possibility to be interest bearing,

4. Creates a separate operating structure to other forms of Central Bank money which serves to provide a new purpose and environment

What are the Benefits of Central Bank Digital Currencies?

The reason that Central Banks are exploring the possibility of issuing their own CBDCs is driven by the success of new technology in the financial sector, the rise of the digital currency landscape, and the decline in the use of cash in the current marketplace. Additionally, included in the rise of digital currencies is the understanding and use of Blockchain technology which, among other things, assists in providing an easier method to transfer money internationally. The existing method of wiring money is expensive and takes multiple days, whereas sending money in the form of a token (whether it is a cryptocurrency or stablecoin) via blockchain technology has proven to be more efficient and less expensive.

READ ALSO; CBN eNAIRA; THE JOURNEY TOWARDS THE LAUNCH OF THE DIGITAL CURRENCY 2021

Many speculate the benefits of issuing a CBDC as Central Banks continue to experiment with this technological advance, but there are four potential key advantages that a CBDC can provide:

• Ensures public availability to a legal tender

• The use of physical cash has been significantly declining in recent years as more consumers use cards and applications to payment settlement. If a CBDC were to be issued and recognized as legal tender, then the decreased use of cash could help alleviate some of the negative use cases for cash (tax evasion, money laundering, illegal transactions, etc.)

• Improvement to the efficiency of payment systems

• A CBDC could improve the efficiency and safety of both retail and large value payment solutions. These improvements span from retail providers using a point of sale, online, or peer-to-peer solutions to wholesale interbank payments with faster settlement options.

• Assists in the transition to a cash-less society

• Government and regulatory authorities have already begun to crack down on cryptocurrency payments or any other forms of money that may transform the current payment system. As an alternative, a CBDC may help boost the possibility of a cash-less society if a Central Bank adopts a digital form of monetary unit which could been seen as a credible alternative by a government or regulatory body.

• Simplification to cross-border payment systems

• As previously mentioned, the current method for international payment options can be time-consuming and expensive. A digital alternative to help streamline this process has the potential to drastically change the global payment ecosystem.

READ ALSO; $51,000 WORTH OF BITCOIN TRADED AS EL-SALVADOR ADOPTS CRYPTO

Where Else are Central Bank Digital Currencies Being Used in the World?

Countries have begun exploring some test case scenarios of a CBDC with their national currency. In February 2020, six Central Banks joined together to create a working group and collaborate on use cases for a CBDC.

China has emerged as a frontrunner in creating their own CBDC with their proposed digital currency electronic payment (DCEP) system. China’s push towards an electronic payment society offers a digital yuan to increase transferability and settlement options. One of China’s goals behind their DCEP is to increase the utilization of the yuan internationally, especially among smaller countries, to help establish the yuan as a dominant global means to trade.

Additionally, the Bank of Japan announced in June 2020 that it will begin experimenting with a digital yen as they start to test the technological feasibility and demonstrate their proof of concept that they’ve been working on.

There are many other countries still working on possible CBDC options, including the United States. Central Banks are exploring possible ways to integrate this technology into their existing monetary system in order to stay current with the constantly evolving technology landscape. The means through which payments are made has drastically evolved over the last ten years and will continue to do so as new technology breakthroughs are made.

0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

Latest Post

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

September 28, 2023

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

September 28, 2023

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

September 28, 2023

The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event

September 28, 2023

Pi Network IOU Price Surges 2.08% Ahead of Mainnet Roadmap Update in October

September 28, 2023

How Pi Network Users Can Spot Phishing Attacks

September 28, 2023
Crypto News

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

by Terfa Ukende
September 28, 2023
0

...

Read more

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event

Pi Network IOU Price Surges 2.08% Ahead of Mainnet Roadmap Update in October

Crypto News

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

by Terfa Ukende
September 28, 2023
0

In a move aimed at bolstering its user experience and expanding accessibility to the world of cryptocurrency, Crypto.com has unveiled...

Read more

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

September 28, 2023

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

September 28, 2023

The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event

September 28, 2023

Pi Network IOU Price Surges 2.08% Ahead of Mainnet Roadmap Update in October

September 28, 2023
Previous Post

INSURGENCY: FG embarked on rebuilding schools in Yobe and other parts of the North East

Next Post

UPDATE: ECOWAS SUSPENDS GUINEA AS IT’S MEMBER STATE

T.I Ukende

T.I Ukende

T.I Ukende is a professional writer and ICT consultant. He has written many evergreen articles for Benuecast blog, classicgist, ellabase and many others before birthing the newsway blog. Newsway delivers well researched and undiluted information on business, employment opportunities, personal finance and government empowerments.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Posts You May Like

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

September 28, 2023

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

September 28, 2023

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

September 28, 2023

The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event

September 28, 2023

Pi Network IOU Price Surges 2.08% Ahead of Mainnet Roadmap Update in October

September 28, 2023

How Pi Network Users Can Spot Phishing Attacks

September 28, 2023

How to Recover a Lost Passphrase and Protect Your Crypto Wallet

September 27, 2023

Pi Chain Mall Surpasses 15 Million PI in Transaction Volume, Showcasing Decentralized E-Commerce Success

September 27, 2023

Pi Network KYC Approval Delay Sparks Controversy Among Pioneers

September 27, 2023

Chase Bank Takes Firm Stance: Declines Payments for Bitcoin and Cryptos, Including Pi Network’s Token

September 27, 2023

McDonald’s Eyes Early Adoption of Pi Payments in El Salvador, Bolstering Crypto Acceptance

September 27, 2023

Pi Network Surpasses 2.27 Billion Pi Coins Distributed to 3.3 Million Wallets

September 27, 2023

Microsoft’s Crypto Wallet Plans for Xbox Could Boost the Pi Network Project

September 27, 2023

Elon Musk’s Endorsement Propels Pi Network Project Towards Sustainability

September 27, 2023

Crypto Influencer ‘BitBoy’ Ben Armstrong Arrested in Dramatic Livestream Outside Former Associate’s House

September 26, 2023
Next Post

UPDATE: ECOWAS SUSPENDS GUINEA AS IT'S MEMBER STATE

DIGITAL LENDING: ACCESS BANK TOPS CHART WITH N5 BILLION GAIN

Categories

Beginner's Guide Business & Finance Crypto News Crypto Regulation Featured Loans News NFTs Opinion Technology
Crypto News

Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet

September 28, 2023
Business & Finance

PiChain Mall Announces Exciting Updates for the PCM Ecosystem

September 28, 2023
Crypto News

Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date

September 28, 2023
Crypto News

The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event

September 28, 2023

Recent Posts

  • Crypto.com Enhances On-Ramp Infrastructure, Expanding Fiat Deposit Options with €EUR Fiat Wallet September 28, 2023
  • PiChain Mall Announces Exciting Updates for the PCM Ecosystem September 28, 2023
  • Ice Network Team Unveils Ambitious Development Roadmap with Mainnet Launch Date September 28, 2023
  • The Pi Network Users Unite for a Historic “PI UNITY RIDE” Event September 28, 2023
  • Pi Network IOU Price Surges 2.08% Ahead of Mainnet Roadmap Update in October September 28, 2023
  • Home
  • Crypto News
  • Crypto Regulation
  • Business & Finance
  • Featured
  • NFTs
  • News
  • Loans
  • Opinion
  • Games
  • Beginner’s Guide
  • Technology

© 2023 Newsway -Nigeria's Top News Platform About us.

No Result
View All Result
  • Home
  • Crypto News
  • Crypto Regulation
  • Business & Finance
  • Featured
  • NFTs
  • News
  • Loans
  • Opinion
  • Games
  • Beginner’s Guide
  • Technology

© 2023 Newsway -Nigeria's Top News Platform About us.