Dutch bank ING Makes Statement Concerning Bank-Owned Digital Currencies
Banks, financial institutions and governments throughout the world are actively looking into the benefits associated with bank-owned digital currencies. Experts believe that this is a direct response to the sheer size of the decentralized cryptocurrency market, which is currently worth over $225 billion.
At this point, some institutions are almost ready to launch their fully-fledged CBDCs. Such is the case of China, where rumours indicate that a digital version of the Yuan might be released by the People’s Central Bank of China sometime next year.
It seems like the idea of bank-owned crypto is also spread throughout Europe, granted that recent reports showcase the opinion of banking and financial experts employed by the Dutch ING Bank. According to them, a central bank currency offering an all-inclusive service is surely coming in the future.
To put things better into perspective, this statement is sourced from an article written by Mark Cliffe, ING’s lead economist, alongside Teunis Brosens, who is ING’s leading economist for digital finance. According to them, “a central bank digital currency will likely emerge within the next five years.” This statement certainly makes sense given the plethora of rumours we have heard until now. But truth be told, we have seen no CBDC prototype in the wild until now, so expectations vary considerably.
According to ING’s chief economist, the appearance of CBDCs will allow the world to finally make the switch from cash to virtual currency. Therefore, overall monetary management will improve throughout the world, thanks to the use of standardized and inclusive systems.
However, numerous members of the digital currency community believe that bank-owned digital currencies offer no real advantage when compared to virtual money stored on credit cards. The same faults apply to this system, as opposed to traditional cryptocurrencies which are known for their decentralization, transparency, immutability, anonymity and security.
On the other hand, a bank-owned currency offers the creator unlimited power over how the currency is issued, managed and spent. Money could be made out of thin air, which is unsustainable and dangerous for the worldwide economy. We also cannot deny the huge potential of fraudulent abuse, which isn’t likely in the case of digital currencies like Bitcoin or Ethereum.
Based on this aspect, we are still curios to see an actual CBDC being used, to help us better gauge the pros and cons of such currencies.