New digital currency CBDC, what can we expect from it?

New digital currencies have been appearing more and more frequently in the market lately, and some of them are already being actively used as a means of payment. As such, each new instrument deserves attention. And among the relatively new options, CBDC deserves particular attention. Even now, many experts say that in the future, it may become the dominant currency around the world.  And it’s worth noting that there are a lot of studies in this field today and about 86% of all banks say that they are seriously considering CBDC. If you take into account the statistics for a few years earlier, the figure has increased in many ways.

The essence of CBDC is certainty, because global financial development requires the use of modern technology and tools from financial institutions. And for banks the benefits are clear:

1. tighter controls.
2. Constant monitoring and tracking of performance.
3. Ability to implement monetary policy measures promptly.
4. Ability to withstand an actively developing financial and technical niche like financial institutions.

But possible risks must also be considered.

To a large extent, innovative solutions depend on the user’s confidence that there will be no abuse by the financial institution itself. It is worth realising that a number of advantages suggest that there are opportunities to benefit. But on the other hand, if the new mechanism does not become a protection for the public, what is left to protect? After all, that is the main task of financial institutions. Regardless of the advantages and disadvantages, financial institutions simply have no choice but to start a digital battle, without this decentralisation could destroy institutions, for which a huge portion of the budget is being spent to save them.

How will the new solution help banks?

We need to work out, if CBDC is just a form of digital money, why aren’t financial institutions doing the issuing? After all, CBDC could be a really great idea:

1. Financial stability. At this point in time, digital currencies are just gaining popularity. Of course, there are limits to the offerings in some cases, but turnover is not affected by this point. In fact, even with a single currency, the cost of paying in cash will be an order of magnitude higher, although people think it is not. Research on this suggests that cash is not as common in many areas of business right now.
2. payment efficiency. There is an opportunity to reduce the serious investment on payments made by physical means and other forms of payments. Even millions of dollars are transferred every second digitally. Of course, when it comes to the first digital currencies, they simply cannot cope with such volume. But today’s technological solutions can solve almost any problem, and thereby expand the possibilities.
3. security. Contrary to what many people think, the future is still in information technology and this niche also deserves attention. And security in this matter plays an important role. And you can’t do without investments, because with low spending there is always a higher risk that funds can be stolen. And financial companies are not so concerned about investments, especially in protection of funds. Especially the reputation is also important, if the user’s deposits disappear, then there will be no trust in the financial institution. And any bank is interested in maximum security.