Russia’s central bank is reviewing the potential pros and cons of the central bank digital currencies according to a policy brief published two days ago. In our latest cryptocurrency news, we discover more.
In the policy brief a document named ‘’Is there a future for central bank digital currencies’’ was brought up and Russia’s Central bank outlined multiple benefits of the CBDCs. The central bank digital currencies have a huge capability to reduce down the transaction costs but also to provide a less risky asset and to improve liquidity.
However, Russia’s central bank pointed out that central bank digital currencies have the potential to reduce the transaction costs can only be possible if there is a technical solution for them. For example, CBDCs will offer improved tools in terms of ease when conducting payments and savings in comparison to debit cards and fiat money.
While there are a lot of positive sides of CBDCs, Russia’s central bank explained the possible drawbacks of the central bank digital currencies such as lack of anonymity. To be more exact, the CBDC’s are unable to provide a higher level of anonymity in comparison o cash. The document pointed out:
“CBDC de facto cannot provide the same level of anonymity that is provided by cash. This is certainly an advantage for regulators, but can be considered a disadvantage by users, not only those who are involved in suspicious activities, but those who are concerned about privacy.”
Russia’s central bank also pointed out that central bank digital currencies can compete with commercial bank deposits when there is low inflation and not so high-interest rates. CBDCs can also become almost equal to cash but only in cases of providing liquidity and ease of use.
As previously explained in almost all of the best cryptocurrency news sites, central bank digital currencies are digital currencies issued by a central bank. They have the status of a legal tender but also have elements of centralized money. Despite Russia’s central bank, the World Economic Forum also released a report claiming that there are about 40 global central banks that plan to use CBDCs. Some of the central banks interested include the Bank for International Settlements and the State Bank of Pakistan.
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