CBDC: Feature Scope, Pricing, and Control

The ECB will announce its new report on central bank digital currencies (CBDCs) in December 2021, discussing the effectiveness of CBDCs and how to eliminate these risks, looking at what to do to prevent abuse based market value and the importance of CBDCs. functioning. . on. Investigate potential sources of payment benefits and potential for abuse after publication.

introduction

Since 2016, the exchange rate of the central bank digital currency (CBDC) has increased further. In October 2020, the European Central Bank announced its first digital euro announcement. The report states that “retail trade that can be done by the public (such as state-owned and non-banking companies), not large sums of money. Managed by a central bank only. In July 2021, the European Central Bank will join the Digital Euro project from October 1, 2021. “I decided to start research for two years.

In a world where electronic payments have become more prevalent, the expectation that CBDCs will eventually be issued reflects the benefits of spending on bank accounts. Bank accounts should remain the simplest, most liquid and most efficient form of cash. There are concerns that if not properly designed, CBDCs could lead to the impact of unfair banking practices, pushing private solutions. For CBDCs to be successful, central banks will generate exchange-based digital returns, widely used to earn needed returns, but not capital gains.

Why the CBDC

Many central banks decide to provide CBDCs, and in a world where consumers and businesses prefer electronic payments, they are responsible for regulating public access and investment of central bank funds and control of the public confidence in the currency. Bank accounts (and other management funds such as utilities) are personal expenses. Citizens think they canexchange the same value. In effect, the bank account has been "pinned" to the bank account, the shape of which signifies the account number. At the same time, the exchange rate allows companies to exchange income for their nominal value. These pegs are necessary for medium-sized banks to maintain financial stability and financial security and governance through a variety of processes, one of the citizens believes banks can exchange for cash on demand.

If demand for cash for payments continues to decline, this competition will be weakened as the transition to a cash-strapped bank is closer to a daily labor recession. If the cash-strapped line of business shrinks over time due to the growth of e-commerce or is affected by COVID-19, the cash flow will gradually disappear. With CBDC, central banks seek to have the world's largest bank of convenient electronic payments.

CBDCs and the risk of banking disintermediation

How can CBDCs have a major impact on banking? CBDC has added another banknote release, which is actually similar to banknotes. However, like any other financial system, its impact depends on the simplicity, motivation and strength of the situation. As a risk-free and cash-to-cash device as a whole, there is no holding value as it can be assumed that CBDC funds/wallets are available for free use, CBDCs will develop additional connections for the deposit, which will impact the special situation.

The global deployment of CBDCs can increase the scale and acceleration of global capitalization. Ferrari, Mehl, Stracca (2020) and IMF (2020) discuss further details on the potential impact of global CBDCs on spending. Everyone has decided that globalization could disrupt global capital, create financial problems for banks in issuing and borrowing countries, and affect remittances.

It was done with little interest. Many central banks have resorted to non-guaranteed interest rates (NIRP), particularly in the Eurozone, Denmark, Sweden, Japan and Switzerland. However, the release of unpaid CBDCs without multiple access or restrictions is the end of NIRPs, which means that future NIRPs will no longer be viable and will result in long-term nominal returns and will not be affected in expectations. In fact, if the return of the least risky assets in the market (liquid bank in a national bank such as the CBDC) is zero, then there is no other asset. Earning money can create bad rates of interest, or the holders will replace it. CBDC. Therefore, an effective restriction on the acquisition or retention of CBDCs should be in place to limit the ability to sustain NIRPs even after future CBDCs have not been declared.

Circumstances affect the use of CBDCs as a method of payment

The bank has not yet set a goal of using the notes through exchanges, but fears its use has declined in recent years. The reasons for not setting a goal are:

(1)A result of the fact that money has always been available for certain projects.

(2)Difficult to assess the use of banknotes as means of payment (based on surveys or commercial records).

(Three)Banknotes, once submitted, are unlikely to affect their use as payment.

These conditions do not apply, at least on the contrary, in the CBDC environment. In fact, no one expected CBDCs to become digital payment methods. Additionally, central banks can easily monitor accessibility. Finally, CBDC payouts will always be decided by the board. Therefore, any goal related to utility also requires the intervention of an intermediary.

Digital payment can be made without any restrictionsIt is essential to the success of CBDCs. As with banknotes, it is necessary to establish a public partnership based on two characteristics of the central bank. The most secure and stable payment instruments in the market and only medium-sized banks that can be legitimate competitors are two important and inconsistent elements. Under normal circumstances, the payer or payer will not be concerned about the quality of the payment equipment used. However, in the event of a financial crisis, a lack of confidence or awareness of the poor quality of property that pays privately can cause business to stagnate and harm the economy. To counter this risk, central banks have been given special power to declare national gains in currency, and using cash is still an option for the same people to pay their debts. The administration of fiat currencies has forced traders to borrow money from one country to another over time.

The Eurosystem report presents the following assumptions:Digital euros are best distributed through a management intermediary.. Banks and other managed banks will fall into this category. This has many benefits, including financial literacy and investment capabilities in providing end-to-end services to customers, facilitating the conversion of banking transactions into cash in the banking industry, and fostering trust in consumers and financial institutions based on evidence to assess compliance.

"Save Anywhere, Pay Security, Pay Yourself"It describes the state of consumer choice to pay with the CBDC. In addition to widespread merchant acceptance and distribution of control through the intermediary, the following may encourage the public to use CBDCs for payment behavior: solving similar or better problems. Also, provide cash-only users for digital payments, facilitate fundraising, and more.

Therefore

Although the benefits of CBDCs have been identified, many questions about the formation of CBDCs need to be addressed as central banks need to adapt to changing markets. sells payments and equipment to help individuals and businesses. It includes what you need to meet your needs and improve usability, business model and management. A CBDC project must be precise, manageable and targeted.