2 years ago
123 FinanceFeeds -
But it begets the question of whether the CBDCs are really in demand or whether the demand for stablecoins and cryptos is being misconstrued as demand for CBDCs. For countries like Singapore, which is pushing ahead with the testing of CBDCs and which is expected to be one of the first major countries to introduce them for their people, there is already a myriad of available digital payment options. The CBDCs, though they may present a stable, reliable, and regulated payment option, would only add on to the list of options that are available to the people to make their payments and it would be difficult for the users to maintain all these digital wallets and funds within them.
It would also present a challenge to the various banks as well as during times of economic downturn, it is likely that the people would hold on to their digital currencies and this would mean that the banks would not have enough funds with it to give out loans. With the digital currencies set to disrupt the existing financial ecosystem, the central banks need to study all the existing options and problems that could arise before going ahead with the introduction of CBDCs. In large countries like China or underdeveloped countries in the African region, CBDCs may present a good option to bring in all the unbanked people into the financial stream, if done well. But for developed countries like Singapore and USA, where there are already many wallets, cards, etc with multiple payment options, it might become difficult to maintain for the users which means that their adoption would suffer.
So the reasons for having CBDCs are not very compelling for the users in such cases and this is a major challenge that the central banks would need to overcome. On the other hand, stablecoins represent a private option for users which would ensure that there are no intermediaries and hence the users would be free to use them as they please for payments, trading, and other purposes without the threat of each of their transactions being tracked.
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