Tech

Erik Gibbs

WEF research shows strong state support for crypto, blockchains

According to a report (in pdf) by the World Economic Forum (WEF), more states and central banks are beginning to warm up to the idea of blockchain technology and cryptocurrencies. The group points out that as many as 40 central banks have launched pilot programs and research projects based on blockchains in order to figure out issues like payment efficiency, financial inclusion and cybersecurity. In addition, the central banks could begin experimenting with central bank digital currencies (CBDC).

The WEF asserts, “CBDC, a commonly proposed application of blockchain and distributed ledger technology (DLT), has attracted much interest within the central banking community for its potential to address long-standing challenges such as financial inclusion, payments efficiency, and payment system operational and cyber resilience. Including but not limited to CBDC, central banks are researching and experimenting with at least 10 specific use cases for blockchain and DLT, exploring where they can potentially unlock new possibilities and improve inefficient processes.

“While central banks across continents are conducting several research projects and pilots with blockchain technology, the degree of depth, progress and interest across efforts varies greatly. In rare cases, such as with the Bank of France, the central bank has already fully deployed blockchain technology.”

The group address some of the possible drawbacks to the issuance of CBDCs, including scalability, transaction speeds, financial stability risks, key management and others. While these are all valid concerns, Bitcoin SV (BSV) has already proven how easy it is to incorporate scaling and large block sizes on the blockchain, despite what developers of some other blockchains have believed. 

The WEF believes that a CBDC could be step forward for currency and that it could improve Know Your Customer and Anti-Money Laundering procedures. It also asserts that it could help to reduce tax evasion and illicit activity, as well as reduce the monopoly commercial banks have on retail deposits. 

The group states in the report, “Moreover, CBDC can potentially play an important role in a future where cash usage dramatically declines. If the use and availability of cash within a country becomes extremely low or non-existent, whether by policy or consumer preferences, then CBDC could potentially aid citizens.”

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