Zimbabwe looking to launch CBDCs
Central Bank Digital Currencies seem to be the craze around the digital world at the moment and Zimbabwe Central Bank has also lent its weight behind the CBDCs as it has signaled its intentions to launch one of its own.
Central banks around the world are scrambling to keep pace with changing payments and fintech space and they have now realized that the demand for a digital currency is out there and it is totally up to them to either seize this moment and launch one of their own or be left behind to get swamped by a variety of private entities who are in the digital currency and crypto space. They have been forced to keep pace and this is why we are seeing the various central banks announcing their intentions to enter into the CBDC space and conducting trials and pilots for the same.
CBDCs a Tough Task
The introduction of CBDCs is not going to be easy and it makes sense to the rest of the world to let the smaller countries take the lead in this and run a sort of pilot programs for them. In October, we saw Nigeria launching its version of the CBDC which has met with some fair success so far. Of course, there continue to be risks of people getting scammed or digital wallets being dried out by hackers but this is always going to be there in the future as well.
These are the kind of risks and situations that the larger countries would look to manage in a much better manner when they release their CBDCs. At the same time, we are also seeing an increasing trend among the central banks, big and small, to shun cryptos. Most of them view the CBDCs as tools that are likely to wean away from the mainstream users from cryptos and they are likely to encourage their citizens to make use of CBDCs for payments and use crypto as asset instruments.
This is the likely approach and consensus that is going to emerge from the central banks except in certain countries like El Salvador, who have chosen to use crypto, bitcoin in their case, as a legal currency. This approach is fraught with a lot of risks and is unlikely to be favored by any of the major currencies who would also want to keep a tab of all the transactions to ensure that they can continue to control and regulate the flow of funds as they are doing now.