As countries continue to key into the Central Bank Digital Currency (CBDC) technology, the tech has proven to have its privacy limitations (CBDC privacy implications). This is according to a doctoral research that explains how states try to regulate cryptocurrency.
The high level of technology proliferation currently shaking the globe has disrupted the financial system with the use of cryptocurrency, and countries are continuing to adopt a central bank digital currency (CBDC).
Thanks to cryptocurrency which is prevalently used in all parts of the world as an alternate means of payment, many countries face the problem of how to effectively regulate the technology. Amidst CBDC privacy implications, decentralized digital currency banks on cryptography to conduct financial transactions protecting fraudsters.
However, according to the research, using cryptocurrency has a severe effect on the global economy likewise, the role of the state. Cryptocurrency evades central bank control over money supply as it is a peer-to-peer payment network that facilitates the sharing of information between persons without an intermediary.
Amidst CBDC privacy implications, countries processing own digital currency
As earlier mentioned, many countries have begun preparing to launch their own CBDC. China comes first in the list of countries already preparing their CBDC as the Asian country has made remarkable process in launching its digital Yuan. Set to launch later this year, China banks have begun testing cryptography password toward launching the digital currency as they are said to be trying to oust the US dollar from being the primary global currency.
European Central bank, also being headed by Christine Lagarde, has begun researching into the outcome if Europe launches its own CBDC. According to Lagarde, the research was aimed at ensuring Europe plays an active role in promoting cheap and speedy payment transactions, likewise exploring the benefits of having a CBDC.
Reportedly, other countries looking at researching on central bank digital currency are Switzerland, Japan, Canada, Sweden, and Britain. These countries have organized a meeting to analyze on collaborative research on digital currencies in Washington.
Canada and crypto regulations
Bank of Canada is no doubt part of countries looking at adopting its own CBDC. This is to curb threat decentralized crypto pose after several years. Canada’s CBDC would be centralized, thereby be under banks’ control, and the institution will be able to regulate transactions in the network.
According to reports by the Bank of Canada, around five percent of Canadians make use of decentralized crypto like Bitcoin and own it. However, Canada’s CBDC would be run on a private blockchain, thereby hindering transparency, unlike the government’s centralized model.