CBDC (Central Bank Digital Currency) Issuance of Central Banks and the Role of Cryptocurrency Finance
ABLE Project #8
There are reports that central banks around the world, including Britain, China and India, are preparing to issue digital currencies (CBDC). The central bank’s blockchain-based digital currency is expected to provide a convenient means of payment and reduce the cost of currency casting and trading.
Because it can be directly issued and incinerated, it will have a substantial impact in the face of financial policies through changes in interest rates on the amount of existing reserves. In addition, the role of commercial banks is expected to be narrowed as deposits and loans can be made directly through Peer-to-Peer.
However, the central bank’s blockchain-based digital currency is affected by the fundamental uncertainties of the country’s monetary policy and border issues. Unlike Bitcoin with limited issuance, the central bank’s digital currencies are exposed to various uncertainties in countries such as politics, economy, and society. Because it is a government-based currency, it cannot have the nature of digital money that goes beyond borders. In addition, it is not free from taxation, anonymity and KYC, so it must be coexisted with cryptocurrency.
As digital money becomes more popular, understanding and public awareness of crypto assets will increase. The ABLE project can complement the disadvantages of the central bank’s digital monetary system in this process. With the exchange system that can exchange digital currencies of various countries, it can break down the border barrier and take various advantages of cryptocurrency compared to digital currency. The experience of investing and borrowing money with Peer-to-Peer-based digital currency will enable to quickly become familiar with cryptocurrency loans and investments.
Digital currencies empowered blockchain legal currencies, but due to centralized structures, cryptocurrency and token economics will grow continuously and uniquely. ABLE’s role in providing financial solutions for cryptocurrency is also expected to grow rapidly with the shift in awareness through the introduction of digital currencies.