Implementation of Central Bank Issued Digital Currency is Likely in 2018

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Implementation of Central Bank Issued Digital Currency is Likely in 2018

The research director at enterprise software company R3 and the global banking consortium, Mr. Anthony Lewis has revealed during a discussion in South Korea on April 4, 2018, that implementation of Central Bank Issued Digital Currency (CBDC) is likely in 2018.

The researcher has further revealed several discussions has been held with the central banks to fix the payment problems. Blockchain type of problem is one of the best solutions to address the payment problems. The group is looking at the wholesale use of the CBDC in 2018.

The legal tender status of the digital currency issued by the Central Bank depends on the law or government regulation. According to the research director, the wholesale use of the digital currency is limited to the markets and financial institutions whereas the retail CBDC is meant for use by the general public.

The fellow panelists of Lewis favor the use of wholesale CBDC. The former CBDC director of Central Bank in Singapore as well as the CBDC lead at IBM, Mr. Stanely Yong are arguing that retail use of CBDC leads to opening billions of individual accounts and could pose credit risks.

The Bank for International Settlements (BIS) is also agreeing with the above opinion that retail use of the digital currency causes instability for the deposit funding of commercial banks.

According to Mr. Lewis, the distributed ledger technology offers more security to the financial system. The decentralized system should be different from the primary system so that it is more secure.

The report published by the Coin Telegraph in December 2017 indicates that researchers in the financial sector have realized the potential benefits of the digital currency. The benefits of CBDCs include enhanced security for the customers in advanced economies and seamless online payments.

People’s Bank of China and Bank of England exploring the ways of issuing own digital currencies is an indication of the impact of CBDC on the structure of the financial system.

Prominent banks like the European Central Bank, the Bank of Japan, and the also banks in Poland, Taiwan, Malaysia and Switzerland have been making headlines with inquiries about using digital ledger systems in the early part of this year.

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