Cryptocurrency and blockchain technology is getting into mainstream media every new day. According to the latest report by the International Monetary Fund (IMF), there are 15 banks stepping ahead with the core of cryptocurrency.
Central Banks and Digital Money
More specifically, central banks of major countries including the Bahamas, Canada, China, Central Bank of Curaçao and Sint Maarten, Eastern Caribbean, Ecuador, Norway, Senegal, Sweden, Tunisia, and Uruguay. It’s quite surprising to look at the growing graph of the crypto interest by these central banks where on the other hand, the market volume of various cryptocurrencies is withdrawing.
Nevertheless, the awareness and the adoption of cryptocurrency as a payment by private players is likely to stimulate the urge to experiment new payment technologies across central banks. Moreover, the global adoption of digital payment has transformed the way ‘global financial system’ works. As said by IMF’s head, Christine Lagarde ‘Money itself is changing’, continuing that;
“Beyond regulation, should the state remain an active player in the market for money? Should it fill the void left by the retreat of cash?”
Encouraging Modern Financial Ecosystem
Reports mentioned two key reasons why central banks are considering digital payment solutions. However, the very first reason analyzed is that ‘cryptocurrencies are the shrinking the role of cash’ and another reason could be to reach millions of audience to enable them to experience modern financial services. Moreover, other banks intend to reduce the cost by transforming printed notes into digital tokens/money.
Following Lagarde’s view, a research scientist at MIT’s Digital Currency Initiative, Robleh Ali argued over the point of contact between citizen and the state. Robleh Ali who was the former researcher at the Bank of England went on to ask the relativity of digital money with traditional cash. He commented that;
“Does the government have an obligation or a duty to provide risk-free money to the general population? Does that duty persist after cash usage drops off?”