As a seasoned researcher with over two decades of experience in the dynamic world of finance and technology, I have witnessed the evolution of financial systems from analog to digital. The proposed hybrid CBDC architecture by the BIS seems like an intriguing blend of traditional banking and innovative technology, but it raises some red flags for me.
The advisory committee at the Bank for International Settlements (BIS) has put forth a conceptual design for a digital currency (CBDC), which operates using a combined method. In this setup, the central bank of a country is in charge of issuing and managing the CBDC, while commercial banks take care of the customer-oriented services.
As per the Bank for International Settlements (BIS), the suggested Central Bank Digital Currency (CBDC) structure adopts a flexible design method, emphasizing a token-based system aimed at preserving user privacy.
Furthermore, the structure of CBDC (Central Bank Digital Currency) allows for the use of account-oriented systems, enabling each user to have unique accounts associated with a particular entity, as outlined in the proposal.
“Privacy can be guaranteed by separating transactions from identity information such that the latter remains with private intermediaries and users. This helps to reduce risks and ensure greater privacy protections than in other models.”
Although they were initially presented as promoting privacy, Central Bank Digital Currencies (CBDCs) are often viewed as contradicting the concept of open-source finance. This perception stems from ongoing discussions among lawmakers, individuals, and even central banks about potential systemic risks, privacy issues, and their overall sustainability.
CBDCs face widespread backlash
In September, the Bank of Canada paused its work on developing a Central Bank Digital Currency (CBDC) following public input suggesting that most Canadians were not keen on utilizing such a currency.
In the U.S., well-known cryptocurrency lawyer, John Deaton, who represents XRP holders in their lawsuit with the Securities and Exchange Commission, has declared his intention to resist Central Bank Digital Currencies (CBDCs).
The lawyer called the campaign against CBDCs “A hill to die on” and cited the dangers of a centrally managed digital ledger to individual liberty as a major cause of concern.
A proposal put forth by Missouri legislator Rick Brattin on December 1, 2024, aimed to restrict Central Bank Digital Currencies (CBDCs) within the state. Key aspects of this bill included:
More casually, European Parliament Member Sarah Knafo has urged the European Union to forgo central bank digital currencies (CBDCs) in favor of using Bitcoin (BTC) instead.
A European parliament member expressed concern that the development of the digital euro could lead to authoritarian rule, and they recommended that the European Union consider building up a strategic reserve of Bitcoin, as more countries are amassing this digital currency.
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2024-12-19 21:21