CZ Issues Warning on CBDCs while Pilot Programs Continue – CBDCs Weekly

CZ Issues Warning on CBDCs while Pilot Programs Continue – CBDCs Weekly

The pro-blockchain Central Bank of the Czech Republic (CZ) issued a warning over central bank digital currencies, while CBDC pilot programs continue.

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The central bank of China, The People’s Bank of China (PBOC), issued a warning on Centralized Distributed Ledger Technologies that could be used to “edit or destroy” the country’s financial records. This comes alongside pilot programs being launched in Beijing and Shanghai.

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CZ Issues Warning on CBDCs while Pilot Programs Continue – CBDCs Weekly

CZ Issues Warning on CBDCs while Pilot Programs Continue – CBDCs Weekly

 

CBDCs: A Methodical Approach

While several countries have shown enthusiasm for Central Bank Digital Currencies (CBDCs), Malaysia has taken a more cautious approach. “The financial system in Malaysia continues to support the running of the economy while satisfying the demands of consumers and companies,” said Bank Negara Malaysia (BMN) Deputy Finance Minister Yamani Hafez Musa recently.

While the Finance Minister said that there are no plans for a CBDC in the near future, he did left the option open. Until then, BMN is participating in initiatives like ‘Project Dunbar,’ to guarantee that it is not left behind if/when it changes its attitude.

‘Project Dunbar’ is a multi-central bank research that is ‘exploring the merits of a single worldwide payments infrastructure.’

Kazakhstan publishes preliminary findings from the CBDC pilot program.

The National Bank of Kazakhstan (NBK) has published the official whitepaper for the ‘Digital Tenge,’ a possible CBDC that is now undergoing a test program.

Various highlighted advantages that a digital tenge may bring to the table can be found within this paper.

  • Ownership tokenization
  • Payments made over the internet
  • Anonymity may be customized.
  • Tokens with a specific function
  • Integration Ease is a term that is used to describe how easy it is to

In the future, NBK says it will make a final decision on whether or not to launch the digital tenge in Q4 of 2022. This decision will be made “based on the results of a comprehensive study of potential benefits and risks, elaboration of technological aspects, assessment of impact on monetary policy and financial stability, and possible effect on the National Payment System and its participants,” according to the document.

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CZ Issues a Warning

With the growing popularity of CBDCs, many people have began to worry what impact they would have on other digital assets such as Bitcoin. Binance CEO Changpeng Zhao (CZ) recently published an essay in which he expressed his thoughts on the subject.

While CZ accepts the merits of CBDCs, he also points out several traits that set them apart from Bitcoin.

  • There is no end to the supply.
  • Permissioned
  • Fees that are higher

Despite the concerns, CZ identifies the aforementioned qualities as reasons why CBDCs replacing Bitcoin is “unlikely to happen.”

With the great majority of government CBDCs still in the early stages of development, CZ took the opportunity to express some cautionary comments. “Regardless of the virtues and disadvantages of CBDCs, I still believe in the endless potential of crypto, and having another alternative is typically preferable than not having one,” he says. The more cryptocurrency options we have, the better. However, when governments and authorities consider establishing their own CBDCs, I advise them to be wary of their walled-garden character. 

Cryptography and blockchain are based on the notion of money freedom. Attempting to impose the limits and hurdles stated above may hinder innovation and technological advancement, which I feel are critical for both national economies and the global crypto and blockchain infrastructure.”

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The “digital yuan” is a warning that came from the Chinese Central Bank. The CBDCs are still continuing, but there is a risk of losing money in the process.

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