CBDC will not withstand the sharp demand among the population
Massive demand for CBDCs could ruin the digital economy
Potential Threats Hold Back the Speed of CBDC Development
Countries wanting full control of their citizens’ wallets will be the first to create CBDC
International consortium of news organizations developing transparency standards.
Central bank digital currencies will inevitably face scaling problems in the event of a market shock, the expert said
Digitized national currencies like the digital yuan will inevitably face regulatory challenges. At least that’s what Yana Afanasyeva, CEO of the legal fintech firm Competitive Compliance thinks.
Will the US Dollar Continue to be the Dominant Reserve Currency?
In an interview with CNBC, Afanasyeva stated that digital currencies could ultimately strongly impact financial markets due to accumulation and non-use issues..
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In particular, the head of Competitive Compliance believes that the main threat in the creation of digital currencies of central banks (CBDC) can become a thing of the past due to a new financial instrument – digital currency of central banks (CBDC). As … More) a request among the population for the withdrawal of funds. In the event of the emergence of CBDC, central banks will become the only points of issuance of currency.
“If something happens, a market shock or panic, then they [CBDC holders] will run en masse to [central] banks and create an avalanche demand for withdrawals, which is obviously an undesirable [development of events],” Afanasyeva said.
It is the potential panic among the population that is holding back the rapid development of CBDC in many countries, she notes. At the same time, Afanasyeva admits that the individual advantages of CBDC in the form of total control and quick financial transactions by the state outweigh the potential risks:
“In my understanding, the Chinese authorities, like many other governments, are very sympathetic to the idea of access to citizens’ wallets in order to quickly issue money.”.
As an example of such accessibility to wallets, Afanasyeva referred to the desire of many countries around the world to quickly and transparently allocate funds “to help certain groups of people.” Now, according to the CEO of Competitive Compliance, this is almost impossible due to excessive financial bureaucracy in the form of a bank rating..
Mass fever around the creation of CBDC has previously reached financial giant PayPal. The company said that it can include CBDC in its payment system if a global trend for such currencies appears. Let us remind you that Russia is no exception. At the end of October 2020, the Central Bank of the Russian Federation announced the launch of public consultations on the issue of the digital ruble.
What are the prospects for CBDC and what are such assets – read in the special material BeInCrypto.
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