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Tag: CBDC

  • Senate hearing on CBDC – No CBDC for the US?

    Senate hearing on CBDC – No CBDC for the US?

    The US regulators are torn between their stance on cryptocurrencies. Where one side would like to see the total adoption and acceptance of cryptocurrencies, the other side does not want anything to do with cryptocurrencies.

    After China rolled out its version of central bank digital currency – the digital yuan – the US also took its first step towards the initiative. A senate hearing was organized for discussion on the viability of a CBDC – a digital dollar. However, the session did not go as well as some may have hoped.

    Senator Elizabeth Warren thrashed the cryptocurrencies – throwing even the possibility of a digital dollar out of the window. The speech of Senator Warren was all that was left after the session as the for-side’s arguments failed to convince the senator. Senator Elizabeth Warren called cryptocurrencies “a lousy investment” and a “haven for illegal activities”. The senator’s argument revolved around the volatility of cryptocurrencies and how that makes them unfit to take the role of a digital currency.

    Furthermore, Warren also highlighted the role of cryptocurrencies in the recent ransomware of JBS USA and Colonial Pipeline. Per the senator, cryptocurrencies lack all the characteristics that a digital currency needs to have – wide acceptance, security and stability.

    The arguments of the four witnesses varied but all favored a centrally-issued digital currency. Pros like lower fees and increased efficiency were cited in the support. China was also a major pro-argument. As the country launched its own digital yuan, more developments in the space can be expected from the country. The only way the United States can catch up with China is by taking an initiative in this direction as soon as possible. The digitization of the world would eventually require the US to issue a digital version of the dollar if it wants the dollar to remain the global reserve currency.

  • AliPay to incorporate the digital yuan

    AliPay to incorporate the digital yuan

    AliPay – the Chinese digital payment giant – has announced to allow some users to link their AliPay accounts with the digital yuan. AliPay is owned by Ant Group and is one of the mobile giants operating in the country – the other one being WeChatPay. Ant Group has confirmed its partifcipation in the roll out of the digital yuan with this move. Both the corporate giants have a sort of duopoly established on the mobile payment ecosystem in the country.

    It had been cited that the launch of the digital yuan will pose as a threat to the dominance of the WeChat Pay and AliPay. The government had been promoting the digital yuan through every channel. Earlier, six state banks had launched a campaign of their own to promote the digital yuan urging their customers to shift to the digital yuan.

    The digital yuan being the government’s digital currency has more chances of becoming widely accepted. It has been considered as much more convenient than the existing mobile payments. The pilot phases have been successfully rolled out for the digital yuan and potential can be seen. The digital yuan is also expected by many to overtake not just AliPay and WeChat Pay but also cryptocurrencies in the country.

    China is the first major economy to have launched a central bank digital currency. The CBDC of the country or the digital yuan – also dubbed as e-renminbi – has been a hallmark step towards the digitization of payment systems. The move is expected to be replicated by many. The domino affect has already been started with the Bank of England recruiting for its CBDC project although the bank has not yet confirmed a CBDC. Moreover, Kazakhstan has also launched a public debate on a potential central bank digital currency.

  • Another country taking the leap toward CBDC: Kazakhstan

    Another country taking the leap toward CBDC: Kazakhstan

    The National Bank of Kazakhstan, NBRK, has issued a report on a digital tenge pilot and has opened a public consultation on the central bank digital currency.

    The digital tenge is a new kind of money to be issued by the central bank which is designed to increase the efficiency of the payment ecosystem in the country by reducing dependance on cash settlement. The National Bank has stressed that the CBDC is not aimed at replacing cash or the currency of the country. In fact, it is designed to act merely as an aide in the payment ecosystem. The CBDC is to be used an as alternative to conventional payment methods.

    According to NBRK the digital tenge will improve the competitiveness in the market and act to strengthen the financial system in the country. The bank has also paid attention towards privacy and security concerns with the digital tenge.

    China is the first major economy to take a step towards a central bank digital currency. The largest country by population has launched a digital yuan – e-renminbi. The country has successfully run pilot tests and banks are actively promoting the digital yuan. The digital yuan marked a new phase in the digitization of the globe. As the country also likes to maintain strict control over the digital sphere, the digital yuan will also act as a tool for that.

    The Bank of England, BoE, had also been debating the issuance of a central bank digital currency for quite some time now. However, the bank has been hesitant in launching one. Although the bank has not officially stated a decision yet, it has started recruiting for CBDC positions. More countries may soon follow suit with launching their central bank digital currencies.

  • Bank of England finally taking a nosedive into CBDC

    Bank of England finally taking a nosedive into CBDC

    The Bank of England has maintained its uncertain position of whether or not the bank will go ahead to launch a central bank digital currency, however, things may change soon for the country as the Bank or BoE has announced seven job openings all strictly related to CBDC.

    The official vacancies window of the bank went live with seven job postings this week. The job positions are project analyst, solution architect, senior manager, technology analyst and a senior enterprise architect – all of which are connect to central bank digital currencies. Moreover, one of the job positing had the title of “Stakeholder Analyst – CBDC”. A senior CBDC policy analyst is also needed by the bank.

    The page for the vacancies listing mentioned that the BoE is yet to land a decision on this matter. But the bank also went on about the importance of developing a central bank digital currency in today’s world. With the cryptocurrency market skyrocketing, the real uses of the blockchain technology had becoming more widely accepted.

    China has taken the initiative into creating its central bank digital currency – the digital yuan or e-renminbi. The digital currency of the country is aimed at maintaining the control of the government over the digital sphere.

    With China taking the lead, other central banks have also realized the importance of a CBDC in the current times. The jobs positing for CBDC related work of the Bank of England may hint towards a favorable decision of the bank concerning the matter.

    If governments throughout the world launch their own central bank digital currencies, this may jeopardize the position of cryptocurrencies as regulators and governments may adopt a tighter stance on cryptocurrencies in order to encourage the use of CBDC.

  • Chinese Institutions Promoting the Digital Yuan

    Chinese Institutions Promoting the Digital Yuan

    China has been one of the leading countries in terms of digital payments. WeChat and AliPay are – were – the most common modes of payment. The Chinese government recently launched a digital yuan – e-renminbi which is expected to take over all other payment methods. The digital yuan had also been speculated to cripple cryptocurrency dominance in the country.

    Ant Group’s AliPay and Tencent’s WeChat Pay had maintained a duopoly in the country over the digital payment sphere. However, with the launch of the new digital yuan by the Chinese government the dynamics are expected to shift soon.

    Being launched by the government, the digital yuan also enjoys the support of major institutions which will boost its adoption like wildfire in no time. In Shanghai, six state banks are actively promoting the digital yuan ahead of a shopping festival on May 5. The banks are persuading their clients to download the digital wallet. The digital yuan is said to be much more convenient than AliPay or WeChat Pay, people just need to realize that by using it. Shanghai is still in the pilot stage of the rollout of the digital yuan.

    The digital yuan’s rollout is a part of the Chinese government’s clamp down on the internet. The Chinese government had been skeptical of cryptocurrencies as well as the increasing dominance of WeChat Pay and AliPay. The People’s Bank of China has called mobile payment dominance a posing risk to the financial system. Hence, the digital yuan serves as a solution.

    China is the first major economy to take an initiative towards a sovereign digital currency. Once the pilot phase is completed, the success of the project will set new precedents for countries all over the globe and will propel global digitization.