Central bank digital currencies exist only because of the fact that unregulated digital currencies exist. This is a unique situation where the central banks and regulators are following the unregulated market.
I think regulated and unregulated currencies will co-exist for the foreseeable future, but you never know.
Challenges of all sorts will have to be fixed,
* Financial risks of every sort and new ones.
* Technology, performance issues (#blockchain is not there yet with regards to performance).
* Interoperability issues (not all CBDC will be on a blockchain network, China is not), to achieve cross border capabilities Interoperability among #cbdc‘s of all nations is essential.
* User privacy, yup CBDC’s will not be anonymous.
But Central bankers usually do not have very constructive views about unregulated digital currencies, criticizing and generalizing crypto currencies, are they right though ?
Over the last few days, governor of Reserve Bank of India (RBI) Shaktikanta Das and European Central Bank‘s president Christine Lagarde, both have criticized unregulated crypto currencies in public interviews.
Shakitikanta Das went as far as to say that the “next financial crises will be caused by crypto”…sure there is nothing else wrong with the world and its current macroeconomic state.
Is there merit in their arguments ? Sure, crypto currencies are outside the control of central banks(for now), speculative and anonymous.
But, another important fact is that the only reason central banks are seriously considering launching their own digital currencies is because the crypto industry demonstrated a “disruptive”path outside of the traditional currency system and which gained unpresedented adoption.
Both regulated and unregulated digital currencies will find their place in the economy, but the central banks owe a lot to the folks who were crazy enough to break the mould.
And much much more will have to be fixed, but I believe it will be worth it, it is high time that the most fundamental element of the economy; central bank money, evolves.