ConsenSys report: Central bank digital currencies can bring huge efficiency and cost savings to the financial system

Ethereum blockchain development company ConsenSys recently published a report entitled "The Future of Central Banks and Digital Currency."

ConsenSys detailed the benefits of digital currency introduction in a country or region, including cheaper cross-border remittances, improved interbank payment settlement, and accelerated retail market innovation.

The report states that “with the establishment of a tokenized asset market, tokenized payments will be required to settle transactions immediately. The introduction of central bank digital currencies is a key element of a feasible, blockchain-based payment system that can achieve large Scale decentralized bill transactions and asset registration. "

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The report also pointed out that if the central bank does not issue its own digital currency, it will lead the market to rely on "private payment tokens", which may bring related risks. Risks include the failure of private entities and financial issues, as private tokens may not be available to everyone.

The report argues that "the central bank's digital currency will bring a risk-free, widely available alternative. It may also have other benefits that can help bring tremendous efficiency and cost savings to the financial system."

The report also states that "internationalized national tokenized currencies" can also address the risks associated with foreign exchange transactions through payment and settlement. Due to easy access on mobile phones, digital currencies issued by central banks may be more "superior" than cash, as the cost of creating and distributing physical cash is high in some countries.

The report also believes that central bank digital currencies can also provide individuals with access to digital and risk-free reserves, which is currently only used by large financial institutions. Central bank digital currencies can mitigate risks by allowing the central bank to directly affect all or part of the money supply in the digital market.

In addition, the report claims that given the design purpose of digital currencies, central banks will be able to use the digital currency to effectively implement sanctions and anti-money laundering policies.

Image source: Pixabay

Author Xiu MU

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