Four years ago, there was a lot of buzz around cryptocurrencies, primarily due to the enormous success of bitcoin. The peak value of bitcoin was staggeringly high at that time—several times the per capita economic output of Bangladesh.
An obvious topic of discussion in those days was the relevance of that cryptocurrency in the context of the everyday lives of common people of Bangladesh.
In my article published in The Daily Star on January 30, 2018, I discussed how with advancements in technology, cryptocurrencies were likely to become the mainstream currency for transactions in the coming years and how central banks might decide to circulate their own cryptocurrencies with their proprietary algorithms and controls.
Since then, central bankers of many countries have worked towards deepening their understanding of cryptocurrencies – both the underlying technology and the risks and opportunities associated with these currencies.
Many central bankers have prohibited the use of cryptocurrencies within their respective regulatory jurisdictions. At the same time, others have initiated their strategy for developing a sovereign-backed digital currency. Indeed, the term central bank digital currency (CBDC) is gaining a lot of attention.
Today, many central banks are deeply involved in planning for their own digital currencies.
According to a recent article in the Economist, more than 50 regulatory bodies are exploring digital currencies.