For short, central bank digital currency or CBDC is a project that depicts the working of various states and governments towards developing the digital versions of their already in circulation fiat money. To do so, the project is considering the use of blockchain technology, something the likes of Bitcoin and many other cryptocurrencies are doing at the moment.
But according to the Swiss national bank economist, it would be unwise to use blockchain systems for centrally controlled digital finance. According to the economist Carlos Lenz, the blockchain systems that support a decentralized network would not be able to fulfill the desires or expectations of state-controlled central finance.
Blockchain as technology wouldn’t do to Become the Base of Centralized Digital Finance
Economists argue that there are other ways to achieve this. If a bank or state wishes to release the digital form of their fiat currency, all they would have to do is open a digital account for the client with their fiat account. This, according to Carlos, would be the simplest way to do so. Another option involves using blockchain technology supporting the central digital currencies’ infrastructure and reach, but according to the economist, the blockchain system is inefficient, and he himself doesn’t favor it as an ideal financial solution.
Talking about the Swiss bank, the economist pointed out that Switzerland doesn’t currently seek any motive to release a digital currency of its own as the current financial systems and currencies are doing just fine. On a lighter note, there are no indications of a CBDC project becoming active in Switzerland just yet. This presents the roadblock that is being faced in events of a massive crypto adoption; the roadblocks are the thoughts that deem the use of cryptocurrencies and the blockchain systems unnecessary.
Everything regarding the financial matters and the monetary systems seem to work just fine for the moment, but what of the imminent future that we would have to deal with? Would it be sufficient to go around without a digital payment system at hand? That is why blockchain technology should be mass adopted, but it is the decentralized aspect of the station that compels the governments and states into shivering fear; thus, they are staying far away from the whole thing.