⚡CBDC'S: What to expect⚡
🏛️Central Bank Digital Currencies (CBDC) can be classified into wholesale and retail. Their key differences are:
🏦 #CBDC Wholesaler
👥Users: They are designed to be used by financial institutions, such as commercial banks.
🎯Purpose: Mainly for the settlement of interbank payments and transactions between entities.
🧾Example of Use: The Federal Reserve tests how banks can use digital dollar tokens to speed up interbank payments.
✍🏻Benefits: Increases efficiency in cross-border payments and securities settlement, solving liquidity problems and counterparty risks.
🏘️ #CBDC Retailer
👥Users: Aimed at consumers and companies for everyday use.
🎯Purpose: Daily transactions, such as purchasing goods and services and sending money between people.
🧾Example of Use: Payments in stores, person-to-person transfers and online.
✍🏻Benefits: "Aims to promote financial inclusion and reduce dependence on cash."
⚠️The potential risks to consider are, in both cases, the following:
⛔Privacy: They could allow governments to track all financial transactions of citizens, raising concerns about invasion of privacy.
🔓Cyber Security: Vulnerable to cyber attacks, with serious consequences for financial stability.
♎Stability: In times of crisis or inflationary periods, savings could be programmed to expire, arguing the need for stabilization.
🌎Centralization: It could limit competition and innovation in the financial sector.
💱Operational Costs: It can be expensive, both in terms of technological development and continuous operation.
⚖️Legal and Regulatory Risks: Lack of clarity in these aspects can generate uncertainty and additional risks.