As the coronavirus outbreak widens and halted many economic activities across the world, the central banks in eurozone appear to be inclined for the digital payment/currency system. Currently, many countries where the payment system is not swift, as a result, financial transactions are not available - whether it be the payment of a credit-card bill or mortgage; an online purchase; or the transfer of money to a relative can take 2-3 days. A national digital currency managed on a single network could allow money to change hands almost instantly. According to the Bank International Settlements (BIS), at least 17 CBDC (Central Banking Digital Currencies) initiatives have been launched to determine whether a digital currency would:

• Offer a convenient payment network to the public at lower cost
• Reduce money laundering and tax evasion
• Help control the money supply and allow for new monetary policies

For the ECB, a CBDC with a status of legal tender could guarantee that all users have access to a cheap and easy means of payment.

Brazil is looking to improve the efficiency of the monetary functions, payments systems, financial inclusion and user experience.

European Central Bank (ECB) has been exploring ways through which it can develop its payments infrastructure and is evaluating solutions with the help of blockchain technology and its pros & cons. With that objective, the ECB is looking for a solution that can ensure that the cash reaches citizens quickly.

The major essence of this exploration has been the coronavirus outbreak, which has caused the ECB ‘s apprehensions about its stimulus cash.

With central banks all over the world considering digital currency implementations, the While Netherlands central bank, De Nederlandsche Bank (DNB), has also released a central bank digital currency report, wherein the Central Bank of Netherlands (DNB) has released a statement outlining its position on a possible central bank digital currency (CBDC).

In China also, CBDCs inclination is already visible to create digital alternatives to cash and coins for retail use. We’ve observed the new inventions within the gamut of cryptos and blockchain, just like state-backed stablecoin, PBoC Deputy chief divulged the Outlines of ‘DCEP’ (Digital Currency Electronic Payment, their native cryptocurrency). While Turkey-based Takasbank introduces physical gold-backed transfer system on a blockchain-based platform.

While Sweden assesses that if the current trend continues, it “will find itself in a situation where cash is no longer generally accepted as a means of payment”. Similarly, Iceland wishes to address the steady decrease in the use of banknotes and coins.

The South Africa Reserve Bank stated that the objective of their Electronic Legal Tender (ELT) project is also to offer a complement to cash. It wants to go down this route for financial inclusion, as the current banking landscape tends to leave many citizens without access to financial services. Courtesy: BNC