The European Central Bank (ECB) says that it is looking to release a digital version of the euro fiat currency. The firm will hold a two-day annual forum, where plans and structural ideas around the currency will be introduced to the world.
There is consistent news about the world’s banks looking to digitize fiat currencies. China had already done so and is now preparing to release a digital version of the Yuan, while the US Federal Reserve also commented that it is potentially looking into the prospects of a digitized dollar.
The ECB’s annual event is going to be attended virtually by several of the world’s leading financial experts. Digitization is going to be one of the primary subjects brought up in the meeting.
Naturally, many want to know how the progress is going for centralized and bank-issued digital currencies and how they can potentially impact what the banks do in the future.
The chief executive of Arcane Media and Research in Oslo, Norway, Richard Paulsen, commented:
“Central bank digital currencies will be a net positive for bitcoin… The structure of a CBDC, in the retail markets, will most definitely be in the form of a token. This also means that for it to work as a payment method, payment solutions must be changed from today’s analog world to a truly digital one. This will make it much easier for e-commerce to switch between CBDCs and bitcoin on each transaction.”
Right now, it can be argued that CBDCs are suddenly a hot topic; the ideas behind them are a little off when compared to the initial philosophies behind bitcoin and other mainstream cryptocurrencies. The assets were designed to take power out of the banks and put it in the hands of consumers and individual customers. Those who can’t gain access to centralized tools and products that banks offer can be financed with cryptocurrencies.
Therefore, the idea that these currencies will now be owned, issued, and controlled by banks goes against the ideologies that have brought crypto into the market. CBDCs have grown in popularity after the introduction of the COVID pandemic, which has required many banks to intervene and assist everyday citizens through further money printing.
Why Can CBDCs Work?
Many are interested to see how the assets can assist in the faster dispersal of stimulus funds and similar products. Keld van Schreven, the managing director and co-founder of digital asset investment firm KR1, stated:
“The economic devastation of COVID-19 and collapse of old systems has meant fast-tracking any innovative technology that can help GDP growth and digital currencies and stable coins fit perfectly into this narrative.”
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