CBDC Digital Currencies Crypto Market Shake-up Crypto Industry New Outlook FTX Meltdown Bank Of International Settlements

CBDC Digital Currencies Crypto Market Shake-up Crypto Industry New Outlook FTX Meltdown Bank Of International Settlements

Top officials at the Bank of International Settlements (BIS) have predicted that the crypto market across the world has still not been killed as a result of last year’s turmoil in the cryptocurrency industry. However, they warned that the new wave of central bank digital currencies (CBDCs) will be facing some geopolitical limitations across the globe. BIS has been a long-term critic of cryptocurrencies, and the international institution has earlier compared Bitcoin to a Ponzi scheme and market bubble. Some of the big predictions made by the BIS have come true in the past. These include the meltdowns of Sam Bankman-Fried’s FTX, Celcius, and Three Arrows Capital, among other such cases. The crypto industry faced a loss of over $2 trillion last year.

However, the crypto market has been witnessing some major signs of recovery after a 40 percent rebound in the price of Bitcoin since the start of 2023.

According to a report by Reuters, the head of the BIS Innovation Hub Cecilia Skingsley, said, “I would assume that the industry will learn from these failures and they will come up with new things.” Skingsley, also a former Swedish central banker, added that past industry problems did not seem to have impacted the plans of central banks about the nationally-issued digital currencies in the future.

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In its capacity as the global central bank umbrella body, BIS has been playing a very effective role as a coordinator among multiple international experiments on matters related to CBDC. This could ensure the development of a network either for public use or for the normal use of banks in the wholesale markets, reported Reuters.

Commenting on this, Skingsley said, “Everything I hear is that those who have these projects are pushing on with them.”

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So far, eleven countries have released their own CBDC. Not just that, over 100 other countries are planning to launch their digital currencies in 2023. For instance, China is expected to expand its Digital Yuan pilot project to a population of over 1.4 billion people in the country. In the European region, the European Central Bank is also expected to go ahead with plans for full-scale tests and related experiments. The US Federal Reserve is already conducting multiple tests related to CBDC. Other countries that have started to take important decisions on the matter include Australia, Britain, Brazil, India, South Korea, and Russia.

These global developments happen as countries across the world have been witnessing a decline in the use of physical cash. This has also resulted in concerned authorities pondering whether their conventional money-printing powers could be threatened by Bitcoin and other such tech giants.

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Recent sanctions on countries such as Russia and Venezuela have also contributed to the idea of having different digital currencies as an alternative to Visa, Mastercard, and Swift networks in the world.

Skingsley said, “You need to be resilient enough when it comes to defence and food supply, but it also becomes important in terms of payment systems.”

But, all these possibilities are affected by unavoidable geopolitical realities. According to a report by Reuters, a top official at the BIS believes that CBDCs must develop more high-tech currencies that are easier and cheaper to send to different other countries. He also added that “tectonic plates” might form with the new forms of e-money. 

However, she agreed that there might never be complete interconnectedness. Skingsley said, “We will never have full interconnectedness.” But, she also agreed that not all countries in the world will be able to fully cooperate, as there will certainly be multiple frictions.

Skingsley predicted that cash would not be used as a method of payment in many countries in the near future.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.

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