In its report , which was published, the magazine "Otlayar" Spanish (said Atalayar ) Many governments and citizens considered that the digital payments is an effective means of transactions in order to reduce the risk of the spread of the virus. For example, the Central Bank of Kenya eliminated fees on mobile banking.
Central banks and private institutions around the world continue to discover the potential of using digital currency, as digital purchases and transactions grow during the outbreak and increasingly dispense with traditional cash transactions.
Opportunities and interests
Just as there are great opportunities in developing digital currency, some concerns are surrounding the safety of unconventional payment systems.
In this context, the International Monetary Fund indicated - through a report issued last month - that in the absence of appropriate guarantees, the development of digital central bank currencies could lead to a decline in the influence of central banks and weaken the impact of monetary policy, which could lead to more Currency instability.
The IMF warned that failure to properly regulate central bank currencies and cryptocurrencies could lead to an increase in illicit financing and make it difficult for local authorities to impose controls on capital flows.
Digital transactions
And unlike cryptocurrencies, central bank digital currencies are not a new type of currency, but rather are considered as a digital form of strong currencies that are supported and issued by the central bank. Although progress has been made in the central bank's digital currencies in recent years, it gained great attention in 2019 after the announcement of Facebook's plans to launch its own digital
currency, "Libra."
In contrast, the Coronavirus outbreak appears to have given policymakers a renewed push to pursue research and development regarding central bank digital currencies.
In this context, the Chinese central bank issued, in mid-October, about 10 million Chinese yuan, equivalent to 1.5 million dollars of digital currency, to 50,000 people in the Schengen area, through a lottery competition.
Perhaps the pilot project, which allowed digital currency enthusiasts to spend it in about 3,000 stores, is the latest step in China's plans to develop its new electronic payment project in digital currency, which the central bank hopes to launch before the end of the year, and this project could be the first of its kind in the world.
China has emerged as the leader in digital currency and the broadest space for digital payments, with nearly 80% of all payments, totaling $ 49 trillion, made via mobile platforms last year. On the other hand, central bank digital currencies are not unique to China.
Last January, a survey conducted by the Bank for International Settlements - a central bank organization headquartered in Switzerland - revealed that 80% of the 66 banks surveyed were doing some kind of business related to central banks' digital currencies in 2019, with an increase. By 70% compared to the previous year, while 50% of banks made progress in experiments or pilot projects.
Another sign of the growing interest in the issue is that the Bank for International Settlements - along with central banks in Canada, England and the European Union, as well as Japan, Sweden, Switzerland and the United States - published its first report on central bank digital currencies last October. The Chinese central bank issued about 10 million Chinese yuan in digital currency last October (Getty Images)
Cryptocurrencies in emerging markets
Banks continued to develop digital currency as cryptocurrencies, in contrast to central bank digital currencies. Cryptocurrencies are decentralized currencies, and the market determines their value and is not affected by mechanisms such as monetary policy or the trade balance.
The increase in digital payments caused by the Corona virus has prompted central banks to study their digital offerings more, and the matter has also sparked interest and demand for digital payment options such as cryptocurrencies.
Meanwhile, the value of the most famous cryptocurrency, Bitcoin, decreased by 50% at the beginning of the epidemic in mid-March, but it has since recovered, reaching a value of about 11 thousand and 900 dollars in last October, exceeding that of 10,000 dollars As a standard for the pre-pandemic phase. Moreover, there has been a noticeable increase in demand for cryptocurrencies in emerging markets.
For many in emerging markets, cryptocurrencies have become a major tool to mitigate currency exchange risks when the local currency loses significant value against the US dollar.
In addition, some have argued that due to the widespread use of alternative payment methods, such as mobile money transfers in countries such as Kenya, users in Africa will become relatively accustomed to digital currencies, and thus may be more willing to use unconventional payment methods.
Source : Spanish Press
