Nevertheless, if cash disappeared, there would be a stronger case to consider a CBDC. do we need a CBDC? Existing payment arrangements – based on commercial money – are already digitally provided and increasingly convenient, instantaneous and available 24/7.
It is understood that the policymakers are concerned with the illicit ways in which consumers and investors use digital currency.Įxcerpt from Financial Times article: Bitcoin not the answer to a cashless society The leaders of France, Germany and Japan have voiced their intention to address the issues surrounding blockchain-based cryptocurrencies at this year's G20 summit, taking place next week. As they navigate the untamable world of digital finance, they will still want to have their cash by their side. With central banks entertaining the possibility of setting up their own cryptocurrency, or rather Central Bank Digital Currencies (CBDC), it is a sure bet that the public is about to be overwhelmed with all sort of complicated e-currencies, e-wallets, cryptocurrencies and more. Because even though the sheer number of non-cash options are increasing, the use of the most durable payment option (cash) is also growing. In fact, a recent study from the Bank of International Settlements revealed just the opposite. Just because the use of digital payments is growing, it does not mean cash use is declining.
That is why it is important to resist the tech-hype driving the herd mentality that believes that 'cash will not be king forever'. Yet, it is undeniable that the rapid advancements in payments technology has ruffled feathers. Others stand by cash and argue that as great as blockchain may be, there is still no other payment form that rivals how fast, convenient and reliable cash can be. Some regard Bitcoin as the holy grail of payments, a long-awaited answer for harmonising payments into a utopia of transparency. A slightly more tentative perspective suggests that Bitcoin is more akin to the Palm Pilot that 'paved the way for today's smartphone'.
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