Peru partners with India, Singapore and Hong Kong to develop CBCD – Blockchain News, Opinion, TV and Jobs
Peru’s central bank president Julio Velarde said the country would join forces with India, Singapore and Hong Kong to develop its own central bank digital currency (CBDC). Peru has decided to partner with the central banks of these countries, mainly because they are much more advanced in their development of CBDCs.
Policymakers around the world are trying to stay on top of the development now that cryptocurrencies are spreading rapidly. âWe’re not going to be the first because we don’t have the resources to be the first and face those risks,â Velarde said, âBut we don’t want to fall behind.
According to a CBDC tracker, 87 countries (accounting for over 90 percent of global GDP) are currently exploring a CBDC. Compared to May 2020, when only 35 countries were considering a CBDC, this is an increasing development. 7 countries have now fully launched a digital currency. Nigeria is the latest country to launch a CBDC, the first outside the Caribbean. 17 other countries, including major economies like China and South Korea, are now in the pilot stage and are preparing for a possible full launch.
The reason for this incredibly rapid development of CBDCs is the fact that digitization is currently in full swing. Central banks must prepare for an inevitable digital future in which the demand for liquidity as a medium of exchange is very likely to weaken. The need for convertibility of private money into digital central bank money is therefore increasingly important.
As mentioned by PwC, other central bank motivations for suing CBDCs include maintaining control over monetary policy, transaction traceability, financial inclusion, anti-money laundering, tax purposes and improvement of cross-border payments.
Critics have noted that CBDCs could pose data security and privacy concerns, but there is also great concern that deposits in banks will be reduced, which could decrease the liquidity of the financial system. That’s why regulators around the world are increasingly concerned about a booming digital market that has bypassed sovereign central banks and is trying to crack down on it. They fear that the market will undermine their control over ordinary global financial systems.