Suren Ayriyan is the Managing Partner and CEO at TEMPO Payments, a digital money transfer company.
__________
Today, 15 countries – including China, Saudi Arabia, and South Africa – are testing their own centralized digital currencies: Central Bank Digital Currencies (CBDCs). Another 87 countries are exploring the virtual minting process and how they can adopt a national electronic currency.
CBDCs are often touted as a panacea for achieving financial exclusion, fighting fraud, and enabling greater currency stability. At the same time, experts have concerns about data privacy, power abuse by central banks, and technology adoption in areas without internet/phone access.
Let's explore the benefits and risks of CBDCs, as well as their aptitude for large adoption.
Central banks are currently overburdened with cash currencies due to prominent bureaucracy and difficulty managing cash flows. Digital currencies allow storing data centrally, eliminating unnecessary complexity and money-printing. Moreover, by enabling citizens to deposit and hold funds in a central bank account, countries could improve access to financial services for members of society who are unbanked or underbanked.
Usually, CBDCs are powered by blockchain technology. Blockchain enables the issuance and control of the money that can then be used by payment institutions, banks, retail customers, and anyone who participates in the country's financial system. As transactions on the blockchain – both nationally and globally – do not require an intermediary or communication between competing banks to complete a transfer, users of CBDCs will benefit from real-time processing and easy accessibility.
Citizens of early-adopting nations can access their digital currency
Read more on cryptonews.com