As interest in CBDCs and DLT grows, WEF intends to enlighten and assist central banks in realizing their potential.
World Economic Forum (WEF) issued a blog titled “What are central bank digital currencies (CBDCs)?” about CBDCs on August 31, after The Reserve Bank of Australia’s (RBA) intentions to establish a CBDC pilot project.
The Reserve Bank of Australia (RBA) stated on August 9 that it is cooperating with the Digital Finance Cooperative Study Centre (DFCRC) on a one-year research initiative to investigate the “innovative use cases and business models” of implementing a CBDC in Australia.
In the blog post, the WEF reiterates the European Central Bank’s (ECB) definition of CBDCs as a state-guaranteed, risk-free form of currency, and anticipates that all European nations would issue their own digital euro by mid-decade.
The blog article goes on to clarify that CBDC is a secure asset since it lacks the inherent dangers and volatility of cryptocurrencies. Individuals and organisations may also hold CBDCs in the central bank or as electronic tokens on mobile devices, prepaid cards, and other digital wallets.
Digital money would then be offered as a quicker, more convenient, and more secure means of making everyday payments. According to WEF, this makes CBDC a supplement to actual currency rather than a substitute.
Regarding the advantages of CBDC to society as a whole, the WEF said that by making money simpler and safer to access, CBDC may help reduce poverty and improve financial inclusion. It may also increase the resilience of financial systems in the event that cash is in short supply or becomes unavailable, due to the fact that CBDC may be exchanged for national currencies. Lastly, the possibility of employing DLT to combat financial crime is also an incentive, as CBDCs may pave the road for enhancing AML/KYC capabilities and money flow transparency.
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