Market Analysis

Central Banks Increasing Interest In CBDCs – Report.

Around 80% of central banks are exploring use cases involving CBDCs [Central Bank Digital Currencies], with 40% already testing proof-of-concept programs, consistent with a new report by blockchain infrastructure platform Bison Trails.

The report by Bison Trails, a unit of cryptocurrency exchange Coinbase, examines digital currency proof-of-concepts launched by over 11 nations and cities, including Hong Kong, Thailand, China, Australia, Singapore and Japan. The report also looks at the role of private digital assets like Diem.

CBDCs are moving toward global implementation, and therefore the infrastructure of a digital currency is critical for a successful rollout, consistent with the report.

Facebook-backed cryptocurrency Diem, formerly referred to as Libra, is motivating many central banks to develop CBDCs, the report noted. Additionally, Diem formed a partnership with Silvergate Bank with plans to test with the USD-pegged stablecoin later this year.

“Diem offers an entire new paradigm in economics: a various association of enterprise and social impact stakeholders developing digital currencies on a permissioned, open-source chain built with the foremost leading edge tech – with a built-in global market and limited barriers for growth once live,” outlined the report titled “Infrastructure and design of CBDCs.”

As per the report, the event of Diem has been considered a “catalyst” for the Chinese government to accelerate its plans for its digital currency issued by the state bank People’s Bank of China.

China is on the brink of launching the digital yuan and is testing the CBDC with commercial institutions and therefore the public.

“The Chinese government remains bent establishing itself as a central player within the emerging global virtual currency market,” the Bison Trails report adds.

The United States Federal Reserve System is taking a more cautious approach regarding the issuance of a CBDC with no firm commitment so far.

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