Even central banks are slowly caving in to cryptocurrency madness
Scroll DownIn recent years the world has moved steadily away from cash as a means of exchange. The rise of cryptocurrencies is just one thing that has governments concerned about the continued profitability of central banks in the digital age. Now, central banks have been left with no option but to consider their own form of digital currency. Central banks are tied to the economy, and by extension they affect the lives of policy makers. Those policy makers and investors are dependent upon the success of central banks. Unregulated cryptocurrencies are a thorn in the side of central banks because they pose a significant threat. As people become more willing to embrace digital coins as a means of exchange, the power of cash is further diminished. Some policy makers are now suggesting that the answer may be for central banks to develop their own digital tokens. The difference between central bank tokens and cryptocurrency is significant. Cryptocurrency operates on a public blockchain. Government-based digital currency would be based on private blockchains, and it would be backed by reserve banks. The decision reflects a desire by countries to face the growing popularity of cryptocurrencies. A major selling point of digital assets is their ability to render traditional banking obsolete. Still, cash remains the driving force of a government's economy. Central banks must find some way to harness the power of blockchain technology for their own benefit. Singapore, Canada, and even the United States are all considering the creation of state-supported digital currencies. They are following in the footsteps of other countries like Sweden which have taken a progressive stance toward the adoption of cryptocurrencies. Switzerland is currently debating the introduction of an e-Swiss Franc which would essentially be a digital version of the country's fiat currency. There are some advantages to central banks creating their own digital assets. One of these is that it would be easier for the coins to be tied to fiat currencies and existing bank accounts of citizens. The hurdle, however, is convincing citizens that are cash-dependent to embrace digital currencies.
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