Deputy Governor Sir Jon Cunliffe of the Bank of England supposedly The most recent one talks about CBDC and stablecoins. Referring to cryptocurrencies as a wave of new technology development, Cunliffe stated that accepting cryptocurrencies could threaten traditional lending operations.
Sir Jon Cunliffe – Deputy Governor of the Bank of England
On the other hand, Cunliffe affirmed that stablecoins associated with major technology platforms and social media could soon become the trend. Specifically:
"In such a world, Depending on the manner and whether stablecoin have supported by other financial assets is not, providing credit to the real economy through the banking system may become failure weak or really disappear. That would be a change lead to profound economic consequences ".
Cunliffe also warned financial institutions to be prepared for the effects that stablecoins bring. Accordingly, the Financial Stability Council (FSB) will issue “regulatory recommendations regarding stablecoins”.
Further analyzing Libra's 'unbound bank' promise, Cunliffe noted that certain proposals from stablecoins shed some light on the failures and costs of the current domestic financial system.
“HThe retail cross-border payment system is relatively slow and expensive, Not reliable and many people do not have access to them. Facebook's Libra proposal is a prime example of stablecoins have such benefits ".
Moreover, talking about the risks related to CBDC, Cunliffe noted that CBDC was too successful and could become “the ruler and a local failure point in itself”.
Do consumers need CBDC?
The digital fever has been fueled by technological advances and reduced cash use. This has led central banks across the globe to seek cautious approaches and explore central bank digital currency use cases.
In report The latest quarterly quarter of the International Settlement Bank (BIS), the Swiss organization has structured its approach according to user needs and related technical design options. BIS is graphically represented and named “Pyramid of CBDC”, aligning user needs into the design choices for the central bank.
The BIS report stated:
"The focus of our approach is the 'retail' aspect of CBDC; We ask the user in need nothing from CBDC. Therefore, we outline way CBDC development through method the approach comes from the needs of the user to choose the design ".
Pyramid of CBDC | Source: BIS
The report reads:
“The top demand of CBDC users is like cash for central banks, transferable in peer-to-peer settings.”
The BIS report recognizes that the primary interest in accepting CBDC lies in its usability. It is difficult for users to accept CBDC if it is not more convenient than current electronic payment.
CBDC is considered a serious current project. A few suggestions have been made to structure, outline and weigh the pros and cons. It was even highlighted in the World Economic Forum in 2020 in Davos, where ConsenSys has released a whitepaper that outlines the framework of a practical proposal for CBDC on the Ethereum blockchain.
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