Decentralization is the final frontier for CBDCs
April 25, 2021. Summarized by summa-bot.
Compression ratio: 18.2%. 1 min read.
Decentralized CBDCs may be the solution to regain the public’s trust in central banking institutions.
As central bank digital currencies, or CBDCs, continue to garner mainstream traction across the global financial landscape in recent years, almost all central banks are actively researching the benefits and risks of offering a digital currency to the public.
Central banks, while curious about CBDCs, are still quite apprehensive about digital assets, since they introduce a level of decentralization into the equation that quite directly challenges the way in which their existing governance protocols work.
However, as public trust in governments and banking institutions continues to erode, there is little incentive for consumers to adopt such kinds of CBDCs. Related: Central bank digital currencies are dead in the water
There are blockchain ecosystems that come replete with decentralized digital identity solutions that can allow central banking institutions to quite easily and efficiently weed out the identities of individuals suspected of committing crimes while protecting the privacy of its other CBDC users.
Another argument for the decentralization of fiat-backed cryptocurrencies is that as more and more countries start to make use of CBDCs and stablecoins, central banks all over the world will try to tighten their regulatory purse strings over these offerings, since they stand to put a dent in their control over payments, banking and the supply of money.