The International Monetary Fund (IMF) has published a report indicating that 97 countries are interested in the concept of central bank virtual currencies (CBDCs). However, two countries have fully introduced theirs, namely Nigeria with its eNaira and the Bahamian sand dollar.
According to the publication titled “Rise of CBDCs” and published in early September 2022, as of July 2022, those CBDCs are in the studies or in the progression matrix.
“Central bank virtual currencies are virtual tokens, cryptocurrencies, issued through a central bank. They are indexed to the price of that country’s fiat currency. – Investopedia.
In terms, those are virtual assets (like bitcoin and ether) owned and regulated by a country’s financial authority like the central bank.
The proliferation of cryptocurrencies since the Covid-19 pandemic has led the world government to start thinking about the tactics in which blockchain generation can be used.
However, the concept of CBDC has its own percentage of controversy. Bitcoin maxis and DeFi enthusiasts argue that any form of virtual asset that is owned and controlled by a central authority, rather than being in fact decentralized, deserves not to be classified as cryptocurrencies.
However, in the case of Nigeria, which introduced its eNaira in October 2021, CBDCs are a way to offer an option to its citizens who love virtual assets after the Central Bank of Nigeria announced a ban on all bureaucracy from cryptocurrency activity in February 2021.
Related Article: CBN Fines 6 Commercial Banks ₦ ₦1. 31 Billion for Cryptocurrency Transactions
According to knowledge provided through the IMF from its CBDC tracking website: Of the 97, 2 (Nigeria and Bahamas) have been introduced and 15 are in the pilot phase. In addition, 15 are lately in the proof-of-concept stage, while 65 countries are still reading theirs. Meanwhile, six countries have cancelled their CBDCs.
In April 2020, China became the first country in the world to test a virtual currency.
With e-CNY, China needs to “offer a convenient but more effective and secure retail payment formula to develop economic inclusion, maintain economic sovereignty, and provide a ‘backup’ payment infrastructure for personal sector payment solutions. “festival and interoperability deserve to be encouraged.
CBDCs from two African countries, Ghana (The Bank of Ghana – E-cedi) and South Africa (South African Reserve Bank – Khokha) are in pilot phase. CBDC France
Zimbabwe (Zimbabwe CBDC), Mauritius (Mauritius CBDC), Ivory Coast (Ivory Coast CBDC), Rwanda (Rwanda CBDC), Sudan (Sudan CBDC), Kenya (Kenya CBDC), Uganda (Uganda CBDC), Zambia (Zambia CBDC), Namibia (Namibia CDBC), Tanzania (Tanzania CBDC), etc. , are in phase.
The report states that one of the benefits of virtual asset is monetary inclusion, as CBDCs are a way for central banks around the world to contribute money to their unbanked population.
Beyond selling monetary inclusion, leading experts argue that CBDCs can create greater resilience for national payment systems and encourage greater competition, which can lead to greater access to money, greater payment power, and in turn, decrease transaction costs. CBDCs can also improve the transparency of money flows and assistance reduces currency substitution (when a country uses a foreign currency in addition to or instead of its own).
The IMF highlighted some of the disruptions that CBDCs may face, adding apathy, which may be adopted, and then fears of a crisis that is brewing due to mass withdrawals and the dangers of cyberattacks.
CBDCs are the way most countries can take advantage of the benefits promised through the blockchain, at least superficially. As the adoption of virtual assets grows and governments recognize their important role in everyday life, the monetary sector can massively accept this significant inclusion.
However, it will take many paintings to convince the population to take the initiative.
In the case of Nigeria, the governor of CBN announced last week the Phase II of eNaira, with a target of 8 million users. However, eNaira remains a foreign concept to many Nigerians. And, for others, it’s distrust of government that will keep the adoption rate low.
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