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Coronavirus crisis pushed central banks to cryptocurrencies – Citi top manager
CONTENT

  • One of the largest international financial conglomerates recognizes the benefits of CBDC

  • China overtakes other countries due to lack of desire to maintain the banking layer in the digital economy

  • The market remains confused about the differences between CBDC and cryptocurrencies

International consortium of news organizations developing transparency standards.

The collapse of financial markets combined with the coronavirus pandemic pushed central banks to discuss the digitalization of the economy

The coronavirus pandemic has become the very reason many central banks need to seriously discuss the digitalization of their economies. This is the conclusion reached by the head of the global government and public sector at Citigroup Bank Julie Monaco.

The coronavirus crisis pushed ...

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In an interview with Bloomberg, Monaco stated that international cooperation on the development of digital currencies has accelerated since the onset of the global crisis:

“The dialogue on this [digital currencies] topic has intensified with the onset of the crisis. We realized in March-April, when people stopped using physical banknotes, that there was an understanding of the effectiveness and benefits of getting rid of tangible money “.

As a Citigroup executive argues, the bigger the economy goes digital, the more tax revenues become, and the costs for the government decrease..

The reason why many countries are so far behind China in the development of the digital economy, according to Monaco, is the desire to preserve the intermediary role of banks in the digital space..

Conscious choice

Monaco also believes that many still do not see the difference between central bank digital currencies (CBDCBills and coins may be a thing of the past due to a new financial instrument – central bank digital currencies (CBDC). As … More) and cryptocurrencies , and the benefits of CBDCs themselves depend solely on the purpose of using such an asset:

“China has advanced the farthest in terms of digital currency. I think that [CBDC] can benefit from this, but only when there is a clear understanding of the goal, ”she added..

A similar opinion was previously expressed by the head of the fintech company Ripple Brad Garlinghouse. According to the head of Ripple, cryptocurrencies have become a real salvation from inflation due to the decision of the US authorities to distribute trillions of dollars in aid to combat the consequences of the coronavirus.

The coronavirus crisis pushed ...

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However, not everyone sees the exceptional benefits of virtual currencies in shaping the digital economy. For example, Russian Prime Minister Mikhail Mishustin believes that the rapid growth in popularity of cryptocurrencies poses a threat to all financial institutions, including central banks. At the same time, the head of government acknowledged that the state should keep up with global trends and become a digital platform “in the good sense of the word”.

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