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- 1 CBDC is the virtual currency formed and issued by the central government. In order to support the actual money of the country.
- 2 whereas stablecoins are the type of cryptocurrencies that help to stabilize the price of the fiat currency.
- 3 The paper based money or physical money consumes a large portion of the central banks in comparison of the virtual money.
CBDC- Central Bank Digital Currency
CBDC- Central Bank Digital Currency is a virtual currency formed by the Central government. The central government issues it to support the country’s physical money.
At some point, there can be confusion regarding cryptocurrency formerly known as a digital currency both CBDC and Cryptocurrency are the form of digitized forms of currency but at the same point, the CBDC is issued and formed by the central government which will be controlled by one entity whereas, the crypto-currency has no traces of the central government.
Stablecoins
These are the type of cryptocurrencies whose value is pegged to one or the other assets or fiat currency helping in stabilizing its price. They try to stabilize the price fluctuation by tying the value of the other stable assets. Also, they are open, global, and have 24/7 access to the internet. They are fast, reasonable, and digitally native to the internet.
The progress of the CBDC in the World.
Although the country faces so many challenges before launching its own CBDC as if they carry operational risk because they are vulnerable to cyber-attacks and need to be more resilient against them. The countries that have so much interest in the CBDC, countries such as Australia, India, China, and the United Kingdom are in the better-advanced stage of development.
People during the Pandemic have shifted their interest from cash to digitized payments because of safety concerns and the cash shortage. And also banks all over the wolds do virtual transactions more than as compared to physical transactions. CBDC is also increasing the transaction speed as they are more flexible than domestic payments.
CBDC can boost and can even bring down the economy
The paper-based money consumes a large portion of the central banks. And the damaged money increases the expense of the central banks which. But virtual currency can easily be controlled and stays undamaged.
The CBDC can have stronger and the success in bringing down the cost of the cross-of-the-border payments. The Central Banks Digital Currency reduces the cost and increases the speed and efficiency. It also provided access for those who don’t have bank accounts and can be accessible through their personal devices which can increase financial inclusion. It provides higher security for the payments.
The role of banks might get reduced in financial system because of the CBDC adoption. And it can be greater tech-challenges for the bank, they might have a lot of work over the cyber security, scalability.
On the other hand the government has full surveillance and control over the CBDC which allows them to freeze the assets for the individuals.
Conclusion
The growth in the Central Bank Digital Currency can be a great drawback of the stable coin. Whereas the stablecoin having a colorful history has some controversial issues. Because in case of the stablecoin the technology exist but the regulatory approvals does not exist.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
