- The WEF will help and inform the central banks to understand the potential of CBDCs and DLT.
- This step shows an interest in the technologies gaining traction.
On August 31, 2022 the World Economic Forum (WEF) published a blog on CBDCs, with the title, “What are central bank digital currencies (CBDCs)?” This step by WEF, follows the Reserve Bank of Australia’s central bank’s (RBA) planning to launch the CBDC pilot project.
While, on August 9, 2022 RBA announced that it is collaborating on a year-long research project along with Digital Finance Cooperative Research Centre (DFCRC) for exploring “innovative use cases and business models” of introducing a CBDC in Australia.
What WEF Discussed in The Blog?
In its blog, WEF discussed three key-points, in the first one it referred as “Australia’s central bank is trialling a digital currency to explore “innovative ways” for homes and businesses to make payments and transfer funds.” It further added that “More than 100 countries, including 19 G20 nations, are now exploring central bank digital currencies (CBDCs). CBDCs could improve financial inclusion, say experts, but cybersecurity threats and theft are potential pitfalls.” in the key-points.
How Safe are CBDCs?
According to the European Central Bank (ECB), Central bank money is “a risk-free form of money that is guaranteed by the state.” And the ECB expects to introduce a digital euro across its 27 member states by mid-decade. Additionally, the Bank of England brief, “CBDCs – because they’re pegged to a country’s national currency – don’t have the volatility of privately issued digital currencies like Bitcoin, Ether (Ethereum) and XRP.”
In continuation, the American central bank, the Federal Reserve, stated that if it introduced a CBDC, it would be “the safest digital asset available to the general public, with no associated credit or liquidity risk.”
WEF, mentioned that the potential of using DLT to deal with financial crime is also an incentive. Because CBDCs can pave the way for boosting AML/ KYC functionalities and transparency of money flows.
From the blog it is clear that WEF is presently in support of the central bank’s process of building and implementing the policies for DLT and CBDCs adoption. It highlights the decisions and all possible risks on technology utilisation.
Source: https://www.thecoinrepublic.com/2022/09/03/world-economic-forum-discuss-cbdc-adoption-and-dlt-use-cases/