Page 108 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) .indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
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It disconnects the middlemen in fi nancial The growing popularity of Crypto, caused
transactions, primarily banks, and permits the central banks to fear losing control
the transactions directly travel from one over the Supply of Money and Payments
person to another person or customer to Systems. The spread of forms of payment
vendor. is not supervised by any of the public or
central body which may weaken Central
This also benefits to eradicate risks to the Banks’ grip on the economic stability and
consumer, like the Collapse of a Commercial Supply of Money.
Bank, and creates a Direct connection
between Consumers and a Central Bank.

Features of Central Bank Digital Currency (CBDCs):

o CBDCs are issued by a Central Bank or a Central Monetary Authority.
o CBDCs are backed by the Central Bank or issuing Monetary Authority.

o CBDCs are easily transferable between Peers via Peer-to-peer Platforms.

o CBDCs may be essentially Programmed for any Application.
o CBDCs are widely accepted as Legal Tender.

o The Digital Money of a Central Bank is linked to a Fiat Currency.

Digital currencies have been surging World’s Central Banks as fears grow those
in popularity over the last few years as Domestic Currencies could be undermined
Cryptocurrencies like Bitcoin have entered by their Growth.
the mainstream and captured millions of
people’s imaginations.  Visa launches a cryptocurrency advisory
arm to help clients navigate Digital
This rise has also turned the heads of the Currency and NFTs.

The idea of CBDCs comes from Cryptocurrencies like Bitcoin
or Ethereum. However, there are differences. Cryptos are
unregulated and decentralized. They are unstable as their
value will depend on usage, investors, and speculation. This
volatility can be seen in the swings in the value of Bitcoin over
the last 12 months.

In response to these fears, central banks currencies. CBDCs’ value is pegged to a
around the world are investigating the country’s currency and they are designed
practicalities of creating their digital to be more stable and secure.

The Institute Of Cost Accountants Of India

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