Lebanon’s central bank has announced plans to launch a central bank digital currency (CBDC) in 2021. Initially rumored in 2019 by the governor of Lebanon’s central bank, Riad Salameh, Lebanon’s CBDC has now been confirmed.
When Lebanon’s CBDC was first rumored in 2019, Salameh said it would be “ exclusively for local use,” however, this time around, Salameh says the Lebanon CBDC will be used to restore confidence in the banking sector and to transition into a cashless system.
Salameh followed that up by saying, “Lebanon doesn’t have any natural resources and we have to keep the gold because it’s an asset that could be liquidated in foreign markets if we face an inevitable, fateful crisis.”
Salameh did not have any further comments regarding what we can expect to see from Lebanon’s CBDC in 2021, and he did not mention any of the fears he had regarding a central bank digital currency back in 2019.
Money laundering and cybersecurity
“Cryptocurrencies were more often used for money laundering than for terrorism financing, because no exchange mechanism exists for these currencies in war zones,” said Salameh back in 2019 when he first announced Lebanon’s CBDC.
Salameh’s concerns regarding money laundering and terrorist financing are very real; however, there are ways to reduce, and nearly eliminate, the chance of those activities taking place. KYC and AML verification are important for any consumer or business facing institution working with digital currency. When you know who is sending or receiving funds within your system, it is much easier to keep a handle on whether they have any relation to illicit or even black-listed entities.
The race for a CBDC
Many countries are currently researching, developing, and piloting a central bank digital currency. The next evolution of money is for fiat currency to get digitized. Digital forms of money coincide better with the lifestyles that many people around the world currently live. In addition, digitized money has many benefits over fiat currency and traditional transaction processes. That being said, governments around the world have been experimenting with blockchain and digitized forms of their own currency to optimize their economies, become more efficient, and to keep up with the way their citizens prefer to interact with the world around them.
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