âĄCBDC'S: What to expectâĄ
đď¸Central Bank Digital Currencies (CBDC) can be classified into wholesale and retail. Their key differences are:
đŚ
#CBDC Wholesaler
đĽUsers: They are designed to be used by financial institutions, such as commercial banks.
đŻPurpose: Mainly for the settlement of interbank payments and transactions between entities.
đ§žExample of Use: The Federal Reserve tests how banks can use digital dollar tokens to speed up interbank payments.
âđťBenefits: Increases efficiency in cross-border payments and securities settlement, solving liquidity problems and counterparty risks.
đď¸
#CBDC Retailer
đĽUsers: Aimed at consumers and companies for everyday use.
đŻPurpose: Daily transactions, such as purchasing goods and services and sending money between people.
đ§žExample of Use: Payments in stores, person-to-person transfers and online.
âđťBenefits: "Aims to promote financial inclusion and reduce dependence on cash."
â ď¸The potential risks to consider are, in both cases, the following:
âPrivacy: They could allow governments to track all financial transactions of citizens, raising concerns about invasion of privacy.
đCyber ââSecurity: Vulnerable to cyber attacks, with serious consequences for financial stability.
âStability: In times of crisis or inflationary periods, savings could be programmed to expire, arguing the need for stabilization.
đCentralization: It could limit competition and innovation in the financial sector.
đąOperational Costs: It can be expensive, both in terms of technological development and continuous operation.
âď¸Legal and Regulatory Risks: Lack of clarity in these aspects can generate uncertainty and additional risks.
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