Steemit Engagement Challenge | S4W2 | Explanation of CBDCs by @majerius

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Hello to all on this beautiful community, it's a great honour and privilege to be part of this timely topic on Central Bank Digital Currency (CBDC). I'll confess i didn't know about this till this topic was raised and i had to do some little research on the subject matter. I'll begin by inviting @tangwe-rene, @codingherald, @wase1234 and lastly @rafk to take part in this contest. Now let's go to our topic of discussion!

Every country has a currency known as the Fiat currency which is the official currency for that particular country given by the bank, now CBDC is another currency which is similar to cryptocurrency in that it is virtual and backed by the central bank of the country and is directly linked to the Fiat currency of the country.
So in simple terms, CBDC is the personal cryptocurrency of a country given by the central bank to replace the Fiat currency.

Where Fiat currency is involved, we begin to notice things like bank notes or coins like in my country Cameroon, we have banknotes of 10,000frs, 5000frs, 2000frs, 1000frs and 500frs. On the other hand, we have coins of 500frs, 100frs, 50frs, 25frs, 10frs, 5frs, 2frs and 1frs. We use all these to settle goods and services or as we would call in economics (legal tender)

From my findings, i noticed that most G20 countries are in the process of exploring and piloting this move. Meanwhile countries like China are already thinking on how to expand their CBDC, some African countries haven't yet begun the process. Some African countries such as Nigeria, Egypt, Ghana, Senegal and even South Africa are envisaging the implementation of this CBDC.^source

Seeing the fast evolution of life, and also the digital world, it would be inappropriate if a country doesn't upgrade too. So the country inorder to progress, would have to create a cryptocurrency which is linked to the Fiat issued by the central bank called the CBDC.

^{Front view of BEAC Building}

Cameroon is a beautiful country who's economic system is ruled by an organization called Bank of Central African States (BEAC). So if there are any changes to be made in a country as concerns finances and currency, this organization must be involved. Unfortunately when the issue of CBDC was brought up, head of the Directorate of Payment Systems at the central bank by the name Jaques Eloundou Ndem wrote an article concerning this matter.

In this article, he made mention of security and trust issues with this system of banking and also the fact that it will be difficult for banks to grant credit to their customers because they keep the digital currencies in their wallets rather than keep their cash in the available banks. He also said, that loans will become very hard to get, as the interests will be extremely high for those who would like to take loans. Because of these reasons, we are yet to see the CBDC in my country.

I think CBDC would be great for a country like Cameroon because of how fast and reliable it can be. With the current system we find ourselves having long queues Infront of Banks trying to change currencies. I believe with the CBDC that will stop and also it'll force my country to get out of the many debts they have.

Looking at the development of the country, then we will notice a great change in the country's economy. Just as China is one of the powerful countries in terms of economy, then my country too would be growing subsequently becoming a lender and not a borrower. I think with CBDC there would be a transparency in money flow and the access to money will effectively be easier and even safer.

From what i explained above about what the CBDC is, think one of the importances of CBDC is that a stable means of digital currency exchange will be available for people having businesses and also consumers. This will make the government to notice a drastic boom in their system of finance because the centralbank alone will be in control of it all.

In that same light, i see that monetary policies will be easily implemented since it's only a central bank which is in charge. This will eventually cause a direct influence on growth and inflation. Which will then cause the monetary system to be stable. Expenses will also be reduced in the process as well as the ease of money flow and financial inclusions.

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Of course yes, i think we really need it in my country. For every economy to grow, there must be improvement and as i said earlier about the importance of CBDC, money flow will be easy and practical for almost everyone. The use of cryptocurrency will be also a great push to the economy.

Inasmuch as we really need this system in my country Cameroon, it's still somehow not appropriate for us to implement it. Because my country is a developing country and many people who make money circulate are business people, who are mostly farmers and less educated people when it comes to digital currency.

So i imagine a scenario where a grandma who sells in the market wants to get paid by such means and she gets scammed or she makes a mistake while purchasing an item. We begin to understand that it will be favourable for some group of individuals and not to some who are in the villages.

The rise of many online fraudster a will make many people more skeptical about the CBDC. And most business people love Fiat currency because they can keep it in any of their microfinance a and get it easily. But fir this CBDC, all your funds are stored in one wallet! So the fraudster needs just the wallet and he's good. I don't think these old folks will have time to check things all the times.

So in my opinion, I don't think that implementing this in Cameroon will be the best of solutions. We will need to make sure we educate the people well and make sure the rich don't get richer before implementing this.

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My opinion on this matter is that CBDC is a global need and should be implemented only when all parameters are good enough and sure to be less faulty. If we make things global then transactions will be very swift and will enable every country to have one thing in common.

If we all have one thing in common, that is in digital currency, then i think the economy of the whole world will somehow be equilibrated and eventually we won't have issues buying and selling articles online. It's at times difficult for others to purchase articles and in addition to the change in rates, there are also charges.

Inasmuch as CBDC are good and have many advantages, it also have some disadvantages and before this has to be implemented in a country or area, the government must first make sure that every thing is set in place to benefit all categories of people. All the doors and windows which can be open to fraudsters should be closed and immediate measures taken to make sure the central bank information is kept confidential.

Best regards,
@majerius