Bank Of Canada Report Looks Into The Pros And Cons Of A CBDC
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The bank of Canada has recently released a report which discusses the risks and the benefits of a central-bank digital currency (CBDC). In the report, published on the 5th of October, it discusses the security risks that would come by launching one as the report goes on to say:
"An anonymous token-based central bank digital currency (CBDC) would pose particular security risks. These risks arise from how balances are aggregated and stored, how CBDC is used for transactions, and how various solutions such as e-wallets, crypto exchanges and banks compete to attract users."
Over the past year or so, central-bank digital currencies has been the talk of the town but is also the topic of a lot of controversy.
Discussions from numerous governments all over the world have started looking into the assets and have even started the development of one with China looking to be the first to release its own digital yuan CBDC.
The central bank's report looks into the numerous risks and benefits that would be in place with a CBDC. Some of the risk areas include asset storage. With cryptocurrencies, holders of a token can make a large number of wallets and spread their phones all over. As a result, more assets storage locations would be plausible when it comes to traditional finance.
The report further go on to highlight:
"If the Bank of Canada were to issue a CBDC, it would likely be token-based… To ensure that CBDC is a safe and efficient means of payment, the Bank needs to carefully consider how CBDC will be aggregated and used, and what externalities will arise from it."