More and more central banks are dealing with the development of decentralized currencies. A digital version of the key Chinese currency could start this year. The ECB and the European member states are also currently working on the development of a corresponding digital currency. On its Twitter account, the Visa Head of Crypto has now indicated that the payment service company sees a future trend in digital central bank currencies.
Visa Manager expresses confidence with CBDCs
On July 4, Cuy Sheffielt, Head of Crypto at the payment service provider VISA, published a tweet , expressing his confidence in the further development of cryptocurrencies. According to Visa Manager, Central Bank Digital Currencies (CBDCs) are one of the most important trends in payment methods for the coming decade.
1 / I'd argue that central bank digital currency (CBDC) is one of the most important trends for the future of money and payments over the next decade.
Regardless of anyone's personal views of whether it's good or bad, the reality is that global interest in it is not going away
– Cuy Sheffield (@cuysheffield) July 3, 2020
According to Sheffield – who heads the payment giant's crypto projects – more and more states and central banks are currently dealing with CBDCs. Depending on whether there is a consensus on the introduction of government digital currencies, this would mean the financial sector, privacy in payment transactions, currency sovereignty and financial inclusion. If CBDCs can prevail, we should even experience a global adaptation of cryptocurrencies. As a result, Bitcoin could also take on its role as digital gold and reach new highs in the old days.
Sheffield considers CBDCs to be a mandatory solution
However, the Visa Manager has already commented on CBDC in the past. At the time, in May 2020, he had already indicated that he would welcome the new means of payment.
However, Sheffield also noted at this point that central banks had no extraordinary interest in consumer-oriented digital currency solutions. In particular, the slow exploration, the reluctant comments and the strong regulation of Libra showed that the central banks have not yet had a real connection to the topic.
Nevertheless, Visa positioned itself early on and expressed public interest in digital currencies. The company also filed a patent for its own cryptocurrency earlier this year. Should this project be implemented, Visa could penetrate a huge market. Visa is the market leader, particularly in the area of credit and debit cards. Almost every customer with a classic current account should have a free or paid credit card from the company. If a connection to a cryptocurrency were created here, the potential of the project would be immense.
The Blockchainwelt newsletter
Find out all the latest news from the blockchain world in a timely and convenient manner by email to your mailbox!
Guaranteed free & without spam!
Status quo in the crypto payment market
The CBDCs are not yet an integral part of our financial system. Nevertheless, more and more central banks are starting to develop suitable concepts. This interest was brought about by Facebook's push. The company introduced the cryptocurrency Libra last year. The first draft was a stablecoin that should be available worldwide. The project was well received in the industry – large partners such as PayPal, Mastercard and Visa were also involved as partners.
However, numerous U.S. authorities believed that the Libra Coin could have a devastating effect on financial stability. In the end, the advance was regulated and numerous cooperation partners withdrew. Libra is now announcing a market launch in 2020 – an updated white paper has already been published.
There are now concrete plans by the ECB and the US Federal Reserve is also actively developing its own cryptocurrency .
CBDCs with increasing relevance in Asia
The Chinese central bank is also said to have already completed the development of a CBDC. Accordingly, this could even start later this year. Experts expect that the exchange of currencies will even be smooth and without much fuss. The reason for this is the use of digital means of payment in the People's Republic. Payment services such as WeChat or AliPay in particular concentrate all payment transactions.
But Japan is also actively involved in the topic of CBDCs. The country has announced that it will create a proof of concept for the development of a digital yen. The government wants to use this PoC to find out whether a corresponding digital currency offers added value and offers the necessary resilience.
Conclusion: CBDCs, the megatrend of the 2020s
As Cuy Sheffield recently emphasized, digital central bank currencies are likely to be one of the most exciting developments in payment transactions. It can be expected that more and more central banks will introduce their own CBDCs in the course of the 2020s. In particular, countries that do not play a relevant position in international payment transactions today could falter the status quo. China in particular should hope for a competitive advantage through the early introduction and try to attack the dominant role of the US dollar.
In my view, alongside DeFi, we should experience one of the most interesting use cases for blockchain technology here . Central banks have to react in the medium to long term if they want to prevent the use of currencies that are not recognized by the state.