Why central banks are adopting digital currencies

There has been a move in the perception of digital forms of money. This is being accelerated by the recent COVID-19 inspired lockdowns. When digital currencies originally came out everything appeared to be somewhat, well bizarre. Catching wind of a Bitcoin piece resembled tuning in to a material science class joined with a PC class. Everyone of the explanations seemed, well a tad nerdy and abnormal. Blockchain technology, bitcoin mining, and digital ‘wallets’. It was certainly not an easily accessible technology. However, be that as it may, what was once jeered at is currently being well received. Digital money now has national banks far and wide moving to attempt to keep up. Even recently the ECB is supposed to be genuinely thinking about the utilisation of a digital currency. See here.

The ECB in their own words say

To ensure that consumers continue to have unfettered access to central bank money in a way that meets their needs in the digital age, the ECB’s Governing Council decided to advance work on the possible issuance of a digital euro – an electronic form of central bank money accessible to all citizens and firms. A digital euro would be introduced alongside cash, it would not replace it. A digital euro would create synergies with private payment solutions and contribute to.

The ECB are not the only central bank to make this move as other central banks begin to test the water.

Facebook spooked central banks

When Facebook proposed a new digital currency that rang alarm bells with central banks. If the 2 billion+ facebook users could suddenly access a digital currency that could easily undermine global financial sovereignty, privacy, and a central bank’s role in implementing monetary policy.

Why this matters?

It means crypto currencies are facing wider acceptance and are moving from ‘fringe’ investment to a potentially new ‘digital currency’ age. Crypto currencies have by no means arrived at complete adoption, but that could be about two change.

In a crypto positive world Bitcoin stands to gain as the ‘digital gold’ in a cryptocurrency world. Interestingly, more and more companies are putting serious cash into Bitcoin. A wider adoption will suit the price of Bitcoin especially as there are only a limited number of coins that can ever be mined. See the recent post here.

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