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Virtual currencies have spread throughout the world and in many different fields. Indeed, there are several central banks that are entering digital currencies. There are many advantages in accepting cryptocurrencies or creating new ones.
In a recent report published by the International Monetary Fund (IMF), there are about 15 central banks that are considering issuing a virtual currency. The report explains that the creation of digital currencies of the central bank (CBDC) would have several advantages for central banks and governments around the world.
For example, using blockchain technology may help new people to receive banking services. People who do not have bank accounts can now access financial services in a very simple way. At the same time, the CBDC would allow governments to reduce the role of cash in the economy. Finally, the replacement of physical and digital banknotes would allow governments to reduce costs.
Christine Lagarde, the head of the International Monetary Fund, commented on this problem:
"Money itself is changing: Beyond regulation, should the state remain an active player in the money market? Should it fill the void left by the withdrawal of money?"
There are several banks that are analyzing the possibility of issuing a CBDC. Sweden, Norway and Canada are just some of the many examples all over the world. In Sweden, there are several institutions and shops that no longer accept physical banknotes. The introduction of a digital currency would allow uninvited people and the most vulnerable to access financial services like the rest of the population.
The People's Bank of China (PBOC) is also developing a virtual currency. However, in this case, the reason is to have more control over its citizens and how they spend their money on a daily basis.
In Africa, there are several governments that could implement the CBDC in order to provide financial services to those who do not. There are many citizens in the small villages of the continent that do not have access to traditional financial services. Greater inclusion of these people in the general society also means integrating them into the economy.
And it seems that Brad Garlinghouse, CEO of Ripple, is in agreement with Christine Lagarde.
In a recent tweet he said,
.@Lagarde It is absolutely correct: money itself is changing. Digital resources not only help solve the problem of financial inclusion, but also the real problem of a global system of fractured payments: it is logical that central banks rely on them. Https://t.co/aFKwrF6Vf9
– Brad Garlinghouse (@bgarlinghouse) December 14, 2018
Ripple is working with many banks around the world to improve payments and international transactions. Furthermore, the company is also trying to solve liquidity problems in the world.
Ripple is currently working with over 150 financial institutions worldwide with several central banks interested in technology.
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