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- Global economists are debating the implications of blockchain as a central bank digital currency implementation
- According to an economist, blockchain is the underlying technology of cryptocurrencies like Bitcoin
- Lenz went on to say that the Swiss central bank has no plans to introduce a digital franc at this time
According to an economist at Switzerland’s central bank, blockchain, the underlying technology of cryptocurrencies like Bitcoin (BTC), is not the best solution for a central bank’s digital currency. According to the German-language Swiss newspaper The Handelszeitung, Carlos Lenz, chief economist at the Swiss National Bank, blockchain-based decentralization features are inefficient for state-controlled digital currencies like the digital franc.
According to Lenz, there are several ways to create a digital currency
According to reports, the economist stated that there are numerous technological options for creating a digital franc. A direct account with the National Bank is one possibility. Not that we want to do it, but that is the simplest form, according to Lenz. Another option, he noted, is to use blockchain technology to enable digital currency operations without the need for a central authority. Blockchain, on the other hand, is inefficient, according to the economist: He does not believe that a decentralized solution is the best option.
Lenz went on to say that the Swiss central bank has no plans to introduce a digital franc at this time. The economist emphasized that the current payment system is adequate and that a CBDC is unnecessary in Switzerland. If Switzerland chooses to stay out of the CBDC development, the economist added, there is no risk that the franc will be replaced by other currencies such as the euro.
Controversies on Blockchain technology
Many global financial experts have questioned the use of blockchain technology for state-controlled digital currencies. Last year, SNB alternative member Thomas Moser argued that using blockchain for a retail CBDC is unnecessary because trust is already provided by the central party of a central bank. Last year, however, the SNB was still looking into blockchain-enabled benefits for implementing a CBDC.
Despite ongoing debates over whether CBDC truly requires blockchain, the Chinese government continues to test the distributed ledger technology for CBDC transactions. The People’s Bank of China used blockchain technology to successfully complete salary payouts in the digital yuan in mid-June.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
