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Digital currencies could crowd out ...

Digital currencies can displace cash from circulation – opinion
CONTENT

  • Former Deputy Governor of the Central Bank of China is confident that CBDC digital currencies can replace cash.

  • He believes that CBDCs will transform all monetary mechanisms and improve the effectiveness of monetary policy..

  • Massive CBDC Launch May Be Bullish For Bitcoin.

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Former member of the top management of the Central Bank of China expressed his support for digital currencies and felt they could replace cash.

Digital currencies could crowd out ...

Wang Yongli, a former vice president of the Central Bank of China and a very influential person in financial circles, posted an article in his WeChat account in support of digital currencies.

The key to wise monetary policy

According to the Chinese publication Global Times, Yongli expressed confidence that digital currencies are quite capable of replacing the cash in circulation, which forms the so-called M0 money supply. He stressed that digital currencies of central banks (CBDCBoards and coins may be a thing of the past due to a new financial instrument – digital currencies of central banks (CBDC). As … More) should be used instead of traditional currencies “to the maximum.” At the same time, he added, in order to maintain their competitiveness, the use of digital currencies should not be limited only to this area..

Yongli is currently Director of the Haixia Blockchain Research Institute, and before that he worked for over 25 years at the Central Bank of China..

Digital currencies could crowd out ...

According to Yongli, new digital currencies are capable of dramatically changing all traditional monetary mechanisms. For example, one of the options for the formation of a new digital currency structure is the creation of exclusive “basic accounts” for all social entities on the digital currency platform of the Central Bank of China. This will allow the regulator to exercise control over digital currencies, but not have a tangible impact on the financial system..

Yongli believes that in this way the central bank will be able to avoid the excessive emission of fiat money. This, in turn, should increase the level of monetary and financial stability..

Will the digital currencies of the Central Bank become a competitor to bitcoin and other cryptocurrencies? Join the discussion in our Telegram channel Рand you will find out everything!

The race has already begun

Yongli’s opinion does not run counter to the policies of the party and government, since the Celestial Empire was one of the first to enter the race to create its own digital asset. China has been working on a digital yuan for several years.

Other states are not lagging behind. So, we already said that a month ago Japan announced its intention to start testing its own CBDC. In June, the Central Bank of the Republic of Korea also announced the formation of an advisory group to study the launch of its own digital currency. Similar trends are now being observed in Europe. Against this background, warnings have already begun to sound that the United States is at risk of lagging behind other countries in the development of CBDC..

However, a number of experts fear that the rush on this issue could create a security hole. For example, Cao Yin, Managing Director of the Digital Renaissance Foundation, notes that CBDCs can be at risk of cyber attacks. Yin added that the state will still need cash reserves. In addition, not everyone will be ready to abandon its use, especially representatives of the older generations..

Digital currencies could crowd out ...

Meanwhile, explosive interest in digital currencies from central banks could be a bullish factor for the bitcoin rate (BTC). Earlier, the editorial staff of BeInCrypto already talked about the study of Grayscale, the world’s largest digital asset management company. According to its results, the launch of CBDC could present the benefits of bitcoin in a favorable light..

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