ā”CBDC'S: What to expectā”
šļøCentral Bank Digital Currencies (CBDC) can be classified into wholesale and retail. Their key differences are:
š¦
#CBDC Wholesaler
š„Users: They are designed to be used by financial institutions, such as commercial banks.
šÆPurpose: Mainly for the settlement of interbank payments and transactions between entities.
š§¾Example of Use: The Federal Reserve tests how banks can use digital dollar tokens to speed up interbank payments.
āš»Benefits: Increases efficiency in cross-border payments and securities settlement, solving liquidity problems and counterparty risks.
šļø
#CBDC Retailer
š„Users: Aimed at consumers and companies for everyday use.
šÆPurpose: Daily transactions, such as purchasing goods and services and sending money between people.
š§¾Example of Use: Payments in stores, person-to-person transfers and online.
āš»Benefits: "Aims to promote financial inclusion and reduce dependence on cash."
ā ļøThe potential risks to consider are, in both cases, the following:
āPrivacy: They could allow governments to track all financial transactions of citizens, raising concerns about invasion of privacy.
šCyber āāSecurity: Vulnerable to cyber attacks, with serious consequences for financial stability.
āStability: In times of crisis or inflationary periods, savings could be programmed to expire, arguing the need for stabilization.
šCentralization: It could limit competition and innovation in the financial sector.
š±Operational Costs: It can be expensive, both in terms of technological development and continuous operation.
āļøLegal and Regulatory Risks: Lack of clarity in these aspects can generate uncertainty and additional risks.
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