Given the constant revolution that cryptocurrencies have caused, global financial institutions are constantly evaluating and analyzing what DIGITAL MONEY REPRESENTS and its effect on the Oil trading and financial market.
An overview of the future of digital finance
The desire of many countries to regulate the use and management of digital currencies is leading the financial ecosystem to a new model of digitization of central banks.
This new project is known as CBDC; this need is accentuated after the COVID-19 pandemic because digital payments increased, leaving aside traditional money, as a second option.
This situation contributed to people beginning to use CRYPTOCURRENCIES with a higher level of acceptance, which put financial institutions on alert since these could significantly influence global financial stability.
Since they exist, the essence of financial entities has been to maintain themselves through the collection of commissions and interest rates, thus achieving not only to preserve their workforce but also growth and stability as financial entities with relatively strong client portfolios that have allowed them to climb positions in the finances.
The madness that revolves around emerging technologies and their application in the financial system through the use of cryptocurrencies and stablecoins brings traditional financial entities upside down.
Society is increasing the use of these digital assets, which raises concerns that they are decentralized and do not require the intervention of any entity for their creation and issuance.
Central Banks and Digital Currencies
The recent Fed conference held in New York City was the perfect setting for banking institutions to present their position regarding digital currencies, which is why they consider that adopting new technologies could somehow adapt to a monetary change.
The financial recession has caused more and more investors to emerging in this type of digital asset with the confidence that these are the new refuge of value for their current investments.
The new concept of banks is known as Central Bank Digital Currency, which according to its acronym would be CBDC. This technology concept promotes the creation of digital currencies by financial institutions.
These digital currencies are issued by central banks, assuming themselves as a representation of the Fiat currency of a particular nation, the technological platform that supports them would be a kind of distributed ledger.
The main objective of this type of financial resource is to reduce the issuance of money in its physical form, thus achieving lower costs not only of printing but of infrastructure and thus stabilizing the economy from the financial recession.
This type of operation’s main characteristic is the process’s speed of execution. As a result, lower costs at the level of banking commissions, thus contributing to greater access to banking entities, managing to diversify their client portfolios.
All this represents an advance in the environment of digital assets, this time from the perspective of States and established and regulated financial entities.
A digital dollar is an option that becomes firmer.
Currently, several countries are joining this new concept of digitalization of money, among which are the Bahamas, considered the first economy in the world to create its digital currency known as the Sand Dollar.
The United States does not seem to be so far from applying this new form of the digital economy as a result that they have issued statements pointing to creating a digital dollar.
Everything points to digitalization since the statistics of money management in the North American country indicate that the handling of cash for making payments has decreased by almost 10%, where even the population under 45 years of age performs most operations digitally.
This new generation of backed or regulated digital money offers users reliable money issued by central banks, which in its favor, helps to avoid the fear of credit risk or lack of liquidity on the part of entities.
According to recent statements by the Fed Vice President, she assumes that digital currencies such as the digital dollar could naturally coexist with fiat currencies.
Achieving a merger that, over time, could be the perfect complement so that the services offered by commercial banking could be supported in the face of the steady increase in people’s desire to invest in cryptocurrencies.
The ease offered by technology Sending and receiving money from anywhere in the world using digital currencies is the main attraction since there is no limitation regarding capital mobilization.
Conclusion
Developed countries have advanced technologies, which are expected to be helpful for a change in the economy. There are many aspects to be evaluated by the authorities before the creation of these digital currencies backed by central banks
