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The international financial authorities have teamed up with the Group of Twenty (G20) to create Central Bank Digital Currency Rules to standardize the regulations and issuance of sovereign digital currencies.
The Bank of International Settlements (BIS), World Bank, and the IMF is working with the European Union and 19 other states from all continents for formalizing the CBDC use in banks, according to the reports.
The report further states that the G20 members, the World Bank, BIS, and the IMF will complete the regulatory frameworks for stablecoins by the end of 2022. Stablecoins are the digital currencies associated with physical money, usually US dollars. Research design, experiments, and technologies for CBDC will also be complete.
Unlike Bitcoins, central banks of the countries will hold access to the transactions and origin to prevent financial crimes. Cryptocurrencies run on a blockchain that conceals the transaction details, whereas the aim of introducing digital currency is to ease the use and encourage cashless movement. Governments will hold all authorities to trace the transactions.
CBDCs can enhance cross-border payments and transferring funds during the pandemic can be more convenient. According to the report, the CBDC system must also link to financial technologies, settle high transaction volumes instantly, prevent cybercrimes, and also comply with the regulations.