Central banks of various large industrial nations have formed a consortium of banks to counter crypto-currencies and use the block chain technology for themselves. It is high time, because otherwise crypto currencies like Bitcoin could drain the water from the central banks in the long run and make them redundant. In this article you can read the details of the central banks’ plan.
Combination of 6 central banks for CBDC
CBDC is the abbreviation for Central Bank Digital Currency, a digital fiat currency controlled by the central bank. These CBDCs are planned as stable coins, which means they always have exactly the same value as the corresponding analogue fiat currency. The European Monetary Union also wants to establish such a stable coin in the long term. Read our article about the CBDC white paper of the European Central Bank.
Now the ECB has joined forces with the central banks of Canada, Japan, the United Kingdom, Sweden and Switzerland to form a banking consortium to jointly advance the CBDC project. According to the press release, joint efforts will be made to adapt CBDC to the specific circumstances of each member country and to share the experience and expertise with all members of the consortium.
“The consortium will explore CBDC application areas, economic, functional and technical design decisions, including cross-border interoperability and the exchange of knowledge on new technologies. It will work in close coordination with local institutions”
Decentralized & transparent crypto currencies vs. CBDC
The advantage of Bitcoin is its decentralization, transparency and censorship resistance. A central bank naturally wants to have control over money flows so that it can intervene in transactions if necessary. This is often cited as a reason for combating terrorism and crime, but, as with public video surveillance, this restricts the rights and privacy of all people. About a week ago, the European Union described cryptocurrencies as a systemic risk.
The important aspect of inflation in fiat currencies should also be mentioned. Crypto-currencies such as Bitcoin have a natural limit on the money supply to prevent rising and persistent inflation. Furthermore, crypto-currencies are not built on a system of debt, government bonds and centralized institutions, which is a huge advantage for normal and everyday users.
Is CBDC good or bad news for crypto currencies?
On the one hand, central bank crypto-currencies could give more attention and legitimacy to the whole cryptospace. On the other hand, central banks could ban Bitcoin and co. even after the introduction of their own crypto currency, in order to get people back to their own digital fiat currency.
Depending on how the central banks and regulators handle crypto-currencies in the future, we will see whether they will continue to be in trouble or not. But one thing remains clear: Decentralized crypto currencies such as Bitcoin cannot be switched off or replaced despite the ban