Opinion | As cryptocurrency risks spread, central bank digital currencies are set for their moment in the sun
- Unlike the hugely volatile and risky private digital coins, digital currencies issued by central banks can protect privacy, promote stability and make cross-border transactions more efficient
In Sweden, which has one of Europe’s highest rates of e-payments, Riksbank has also been testing out the e-krona as the use of cash in its economy shrinks.
In Britain, the Bank of England has set up a task force to explore the use of a CBDC, alongside cash and bank deposits. Similarly, the European Central Bank is considering a digital euro, while much research and discussion continues in the United States. No G7 nation has yet to issue a CBDC.
But do CBDCs offer a beneficial alternative to existing forms of electronic payment, such as Britain’s Faster Payments? Are CBDCs even necessary, when more than 100 million people globally are estimated to be using privately created cryptocurrencies and stablecoins already?
Yet CBDCs can play a critical role. There is a latent urgency to develop them as the cryptoasset market, thought to be worth about US$2 trillion, continues to grow.