Virtual currencies expanded all over the world and in many different fields. Indeed, there are several central banks that are getting into digital currencies. There are many benefits of embracing cryptocurrencies or creating new ones.
In a recent report released by the International Monetary Fund (IMF), there are around 15 central banks that are thinking about issuing a virtual currency. The report explains that creating central bank digital currencies (CBDCs) would have several benefits for central banks and governments around the world.
For example, using blockchain technology it might be possible to help new individuals receive banking services. People that do not have bank accounts can now access financial services in a very simple way. At the same time, CBDCs would allow governments to reduce the role of cash in the economy. Finally, replacing physical banknotes with digital ones would allow governments to reduce costs.
Christine Lagarde, the head of the IMF, commented on this issue:
“Money itself is changing. Beyond regulation, should the state remain an active player in the market for money? Should it fill the void left by the retreat of cash?”
There are several banks that are analyzing the possibility to issue a CBDC. Sweden, Norway and Canada are just some of the many examples around the world. In Sweden, there are several institutions and shops that do not accept physical banknotes anymore. Introducing a digital currency would allow unbanked and those most vulnerable to have access to financial services as the rest of the population.
The People’s Bank of China (PBOC) is also developing a virtual currency. Nevertheless, in this case, the reason is to have a larger control over its citizens and how they spend their money on a daily basis.
In Africa, there are several governments that could implement CBDC in order to provide financial services to those that do not have them. There are many citizens in small villages on the continent that do not have access to mainstream financial services. A bigger inclusion of these people to the general society means also to integrate them into the economy.
And it seems that Brad Garlinghouse, the CEO of Ripple, agrees with Christine Lagarde.
In a recent tweet he said,
Ripple is also working with many banks around the world in order to improve cross-border payments and transactions. Furthermore, the company is also trying to solve liquidity problems in the world.
Ripple is currently working with more than 150 financial institutions around the globe with several central banks interested in the technology.