Former Bank of England consultant argues that CBDCs are not worth the risk
According to Crowdsourcingweek statistics, as many as 105 nations have shown interest in these digital currencies issued by central banks.
The Bahamas, Nigeria, the Caribbean, China, and Jamaica are among the nations that have established CBDCs. In addition, several nations, including Ghana, South Africa, the United Arab Emirates, Thailand, Malaysia, and Singapore, have established test programs.
Tony Yates, a former adviser at the Bank of England, argues that the initiative is not worthwhile despite the growing interest in CBDCs. According to Yates, the dangers and expenses associated with implementing digital currencies much outweigh their advantages. The adviser expressed his viewpoint in a Financial Times opinion post.
Remember that the Bank of England is one of the central banks contemplating the introduction of the CBDC. But Yates opposes this action.
Until recently, Yates has not been a fan of crypto. Therefore, he argues that cryptocurrencies are not the greatest candidates for use as currency.
According to him, currency transactions are time-consuming and costly. In addition, cryptocurrencies do not have a funds supply managed by people to maintain a consistent flow for inflation. The advice specifically identifies BTC use as speculative and illegal.
Since 2022, illegal crypto transactions and activity have decreased, according to research from CipherTrace. According to the blockchain company, the range for 2020 was between 0.62 and 0.65 percent. In 2021, the figure decreased to 0.10-0.15%.
The mentioned data indicate that BTC use in criminal operations has decreased significantly. Moreover, being a public ledger, it is accessible to everyone, which reduces illicit activity loopholes.
Additionally, its Layer-2 Lightening Network facilitates remittance payments quicker than in the past, refuting Yates’s assertion on the duration of crypto transactions. Moreover, throughout the years, new use cases for cryptocurrencies and stablecoins have evolved, indicating greater acceptability and popularity.
Yates challenges the rationale of the worldwide implementation of CBDCs, given that several nations have already established digital versions of banknotes, currency, and coins. Regarding this, Yates opines that the currencies might be used to suppress cryptocurrencies, such as Bitcoin.
However, he noted that the introduction of CBDCs would make central bank reserves available to a broader audience than counterparties. Moreover, according to Yates, it would be a tremendous task for central banks to hire personnel for designing and operating the software and hardware for CBDCs.
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