The decentralization of money could start from the central banks themselves
Although there is still a long way to go before the global adoption of cryptocurrencies, the phenomenon of virtual currencies has already achieved remarkable success: getting people and institutions to consider redefining their relationship with money and banks.
The first phase of a transition to a real "people's money" may not be gestated by the crypto holders, to the surprise of many, but by the central banks themselves, who will have to strive to remain valid in a global economy that is changing and which aims to leave them on the road.
When the official currencies become digital and can offer the advantages that the crypts have placed in the hands of the people, a competition will arise that will benefit everyone.
The volatility of the exchange rate could be managed through intelligent contracts, for example, and the dependence of the dollar as the currency of choice for international trade would disappear, which could be the definitive opportunity for the best established cryptocurrencies.
However, the road does not seem to be free of obstacles. Recently, the Bank for International Settlements has published a part of its annual report, which addresses the issue of crypts, and warns that the mere existence of CBDCs, or digital currencies issued by central banks, could aggravate the situation in times of crisis. of the countries, by facilitating the appearance of severe bank runs.
But the problem does not seem to be in the issue of CBDC itself, but in the commercial banks as they are known today. The regulatory, social and technical infrastructure on which they operate is decades old and suffers everywhere from unnecessary costs.
Many banks maintain centralized and non-interoperable databases in mainframes based on such obsolete languages as COBOL. They depend on multiple intermediaries to process their payments, each with their own independent ledger, which must then be reconciled with the others, in slow and inefficient processes.
Charles Cascarilla, the CEO of Paxos, a company that is building blockchain-based business infrastructure for the financial system, puts it this way: "Why, in a digital age, we can not move money 24 hours a day, 7 days a week? Because we have a bad middleware, and that bad middleware is the existing financial infrastructure. "
Many central bankers also know that this is the problem, and they perceive the real benefits that the elimination of bank payments would bring, recognizing the potential of digital currencies to help in this. The question is how to get there neatly.
One step at a time
A solution could be the gradual implementation. The CBDC would not be available at the beginning for all; Non-banking financial institutions would have access to them first, followed by some important corporations, then smaller companies and, finally, they would be placed in the hands of individuals.
The introduction of an interest rate for the single CBDC and determined by the central bank would be another alternative. This would provide a means to regulate the flow of money between banks and digital fiat wallets, to effect a long-term transition without major impacts to the system.
Of course, everything is nothing more than mere speculation. The relationships of commercial banks with their respective central banks are long-standing and too entrenched to consider any change, at least in the short term.
And while Layer 2 solutions begin to help with the scalability and liquidity of the crypts, further enhancing their adoption, the phenomenon will continue to influence the world, like a genie from a bottle, to which neither central banks nor anyone else , they will be able to lock up again.
Source: CoinDesk