As the world’s third-largest central bank, the People’s Bank of China is rightfully grabbing much of the attention surrounding the advance of central bank digital currencies (CBDCs), but it is far from alone as monetary regulators around the world are moving forward with their own plans to launch in-house cryptocurrencies.
In Brazil, for example, the central bank issued guidelines tied to a CBDC, setting in place standards and definitions of what a digital currency might look like, Bitcoin.com reported. The digital fiat, per the guidelines, would act as a substitute for cash and would have to conform to strict anti-money laundering (AML) and anti-terrorism regulations. Privacy and security issues and guidelines, according to the report, will be determined by the Bank Secrecy Law and by the General Law for Protection of Personal Data. In part, the digital currency would also be used for smart contracts, the Internet of Things (IoT) and other use cases.
Sweden In New CBDC Trials
Separately, Sweden’s central bank is moving ahead with trials of its own CBDC via a joint effort between the Riksbank and Handelsbanken, a retail financial institution (FI) based in the country, Cointelegraph reported. The news marks an advancement from earlier stages of an eKrona development that had only simulated participants.
Not everyone is sure they want to bring digital money (in a general form) into the economy at large. In one example, as reported by Reuters, in Qatar, Sheikh Mohammed bin Abdulrahman al-Thani, the deputy prime minister, has said that the central bank is unlikely to invest in crypto in the near future as there is still “uncertainty” over those offerings.
China And The Payments Monitoring Question?
In China, the controversy over whether the government will use CBDCs as a way to monitor payments continues. As reported by Ledger Insights, Yao Qian, who led the country’s digital currency research until 2018, said a CBDC would not be needed to track payments because the government can already do that, according to his own personal views.
“In fact, third-party payment technology can already enable the transparency of all real-time transactions,” Qian said, per Ledger Insights.
Qian is a director at the China Securities Regulatory Commission. Ledger Insights reported that the CBDC would operate as a payments alternative to WeChat Pay and Alipay. In addition, in what seems a rebuttal to concerns that China is looking to weaken the U.S. dollar’s place as the world’s reserve currency, Qian said that this is “not necessarily the goal of CBDC” but more a “natural evolution of the digital process and market selection.”
Separately, in terms of mechanics, he said, per the report, “we can imagine that if the central bank’s digital currency runs directly on blockchain networks such as Ethereum and Diem, then the central bank can use their BaaS services to directly provide the central bank’s digital currency to users without the need for intermediaries.”
Read more: https://www.pymnts.com/digital-payments/2021/stakes-implications-rise-central-bank-digital-currencies-launching/