“International settlements”: With countries heading towards adopting a sovereign currency
4 questions about digital currencies for global central banks
The Bank for International Settlements has indicated that sovereign digital currencies will become available on mobile phones.
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A report by the Bank for International Settlements, which is described as the “bank of central banks” in the world, showed that there is a trend towards issuing central banks in a number of countries, their own sovereign digital currency, making them available directly on mobile phones, and they can also be exchanged instantly over distances. Long, just like e-mail, but the director of the Bendheim Center for Finance at Princeton University in the United States, and the vice president of the American Financial Association, Marcus Brunnermeier, said in an article published by the Financial Times, that “in order to prepare for a world in which we use digital cash.” In the form of central bank digital currencies, monetary authorities are currently exploring technical solutions and design options for those currencies.” He explained that there are four important basic questions that require an answer from legislative bodies and central banks around the world, which are:
Anonymity and privacy
Currently, within legally defined frameworks, everyone can spend a certain amount of money without anyone knowing, while it is technically possible to maintain such anonymity for central bank digital currencies.
Therefore, communities have to discuss many questions about privacy and the regulation of private technology companies, and their involvement in this field.
Regulation Concerns and the Form of Financial Intermediation
By offering secure, easily accessible digital money, central banks can deprive private banks of their deposit base, influencing competition between banks and digital platforms.
While these are legitimate concerns for banks and society, each can be addressed by designing the digital central bank currencies themselves, by modifying their liquidity provision methods.
The need to embrace innovation
The rationale for digital currencies for central banks is to continue providing the economy with public money in this new environment.
To do so, central banks will have to catch up with the wave of innovation unleashed by private money issuers, and make sure that new forms of private money are safe and trustworthy.
It is also important that future regulations do not stymie innovation in payments that benefit everyone.
Addressing currency internationalization concerns
Digital money is by nature cross-border and will expose countries to increased competition.
This could lead to the creation of “cryptocurrency zones,” where currency use is associated with a specific digital network rather than a specific country.
Unleashing this competition will depend entirely on whether future central bank digital currencies are accessible to non-residents and can be easily redeemed.
new front
Director of the Bendheim Center for Finance at Princeton University in the United States, and Vice President of the American Financial Association, Marcus Brunnermeier, said that the entry of a number of central banks around the world into the field of digital money represents a new and exciting front in the field of finance, but by answering questions On the other hand, governments will ensure that customers everywhere benefit from the era of innovation.
• Monetary authorities around the world are currently exploring technical solutions and design options for digital currencies.
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