The Russian central bank investigated the potential advantages and disadvantages of the Central Bank Digital Currencies (CBDC) in the policy paper published on April 18th.
In the article "Does the Future of Central Bank Digital Currencies" mean, the Central Bank of the Russian Federation has presented several potential CBDC advantages, including their ability to reduce transaction costs in the economy, as well as less risky and liquid assets.
However, the Bank of Russia has pointed out that CBDC's potential to reduce transaction costs can only be achieved if a technical solution to CBDCs provides a better tool for ease of payment and savings compared to fiat money and debit cards.
Although acknowledging the benefits of the CBDC, the central bank pointed out that the lack of CBDC anonymity is the only potential drawback. Specifically, the bank pointed out the CBDC's inability to ensure the same level of anonymity as compared to cash.
The document states:
"The CBDC cannot provide the same level of anonymity as it is in cash." This is certainly an advantage for regulators, but users can be considered unfavorable, not just those involved in suspicious activity but also those who care about privacy. "
The Bank of Russia also stated that the CBDC could compete with deposits of commercial banks in the context of low inflation and moderate interest rates. CBDCs can become an integral cash equivalent only if they provide liquidity and ease of use, the bank writes.
The CBDC is a digital currency issued by a central bank with statutory payment status and other centralized and fiduciary assets.
Recently, the World Economic Forum published a report stating that at least 40 global central banks were planning to experiment with CBDCs. Previously, the Bank for International Settlements published a study that shows that 70% of central banks around the world are exploring the creation of the CBDC.
Deputy Governor of the State Bank of Pakistan, the central bank in the country, announced on April 1 that the goal of this institution is to issue digital currency by 2025.
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