States are preparing to convert their official currencies into cryptocurrency!

10/09/2020

Central Banks started to seriously consider this business. Countries are preparing to convert their official currencies into cryptocurrency. By 2030, three to five countries around the world will completely replace their legal currencies with a central bank digital currency, or CBDC, according to European think tanks.

DGen, a nonprofit think tank focusing on Dutch financial technology, published a report on September 9 that specifically focused on the geopolitical trends of the CBDC.

The title of the 30-page report of the CBDC was given as "Geopolitical Branches of Large Digital Currency". It gives an in-depth look at the major global legal currencies (US dollar, euro, and Chinese yuan). The report also includes some important preliminary guidelines on the impact of the CBDC on the global financial system, with the support of institutions such as the European Central Bank (ECB), Standard Chartered Bank and Frankfurt School.

Therefore dGen estimates that within ten years there will be three to five countries in the world that will completely replace their national currencies with CBDC. While DGen does not accurately predict which country will transition by 2030, the report summarizes the CBDC's significant progress in jurisdictions such as the Bahamas and Sweden. The think tank states that Sweden's e-krona development is in line with the country's cashless exit plan by 2025.

Among other estimates, dGen predicts that if Europe does not develop its own CBDC by 2025, China's digital yuan project will surpass the euro. The think tank also emphasizes that the European Central Bank “must create a favorable environment for the well-being of the digital euro. Otherwise, he points out that the currency is at risk of losing its positions in the global economy.

Philipp Sandner, head of the Frankfurt School Blockchain Center, criticized the European Central Bank for its inaction:

"The European Central Bank's response has been very slow. In particular, the benefits of CBDC based on programmable currencies for the industry are currently being underestimated. Preserving the geographic location of the European Central Bank, given the Libra and DC / EP (digital yuan). must react quickly for it."

According to the report, China's CBDC poses a threat to the euro, and it is unlikely that the digital yuan will surpass the US dollar as the world's reserve currency in the near future. DGen wrote: "The introduction of the digital yuan will not replace the US dollar, at least not immediately. According to the think tank, it is difficult for the digital yuan to surpass the US dollar due to "China's political turmoil, efforts to replenish its reserves and invoice".

Essentially, providing cashless transactions, accelerating payments, and aiming to lower the associated costs is like a digital representation of cryptocurrency, according to a CBDC report published by a Central Bank. Its main purpose is to provide cashless transactions, speed up payments and reduce associated costs. Although China is the most active jurisdiction in the development of CBDC, more countries are beginning to actively explore new financial instruments. Therefore, the Brazilian Central Bank announced in early September that Brazilians are expected to see a CBDC before 2023.