The Future Of Central Bank Digital Currencies (CBDCs) In Global Finance

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The Central Bank digital currency (CBDC) can simply be defined as that digital currency that was introduced, designed, created and is controlled by the central banks, the word or term digital currency simply means a currency that is money or a means of exchanging value and means of purchase that is not physical it online and one can not touch or feel this currency they can only see it over a computer screen.

It is not too hard to believe that the creation, design and introduction of digital currency by central banks which are basically decentralized organizations was no doubt inspired or as a result of trying to compete with the well known and fast growing and evolving decentralized digital currency if you don't already know I'm talking about cryptocurrency so it is my belief that the central bank digital currency would be made in the image of cryptocurrencies apart from the fact that it is centralized.

The central bank digital currency has been implemented by some or many countries around the world including our very own Nigeria but as a result of many factors both good and bad we are not quite sure of the success of this central bank digital currency however some economists and researchers have made their findings although they are unsure and it is totally dependent of factors that are out of our control I would say that the future of central bank digital currency in global finance should look like these;

ENHANCED FINANCIAL INCLUSION AND ACCESSIBILITY

Let's go people; so technically, based on intensive research and on probability and predictions the central bank's digital currency is going to be able to facilitate and play the role of increasing participation in finance and also increase the accessibility of financial services to people and individuals who previously did not have any means of accessing these services or had certain concerns that prevented them from taking part in finance, with the central bank digital currency they will come to involve in finance even on a global scale.

Additionally, research shows that approximately 1.4 billion people worldwide, 1.4 billion people of the worlds population do not necessarily have access to traditional banking or financial services, so just imagine, with this potential to offer and facilitate financial inclusion the central bank digital currency would be looking forward to improving global finance by getting part of this 1.4 billion people to begin participating and making use of financial services.

One way in which central banks can make the central bank digital currency adoptable is by reducing the challenges and circumstances that basically makes entry difficult, hard and creates a barrier to financial systems, one of the challenges they can remove is transaction processing cost and the stress usually involved in excuting transactions as a result the central bank digital currencies will basically reduce the amount of the people, the 1.4
billion unvanked population in the world today.

STREAMLINED CROSS BORDER PAYMENTS

When it comes to making payments for goods and services across border that is from one country to another we know the challenges we face and that being said I would like to apologize to those of us who have had the misfortune of involving in trading or any cross border transactions with the traditional financial system because quite frankly there are alot of disadvantages and stress involved not to mention the inefficiencies all this challenges in the future is likely to be addressed by the central bank digital currency.

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Basically these challenges and disadvantages involved in carrying out or processing transactions with the traditional financial or payment systems usually arises as a result of the fact that these traditional systems often involves and requires multiple intermediaries to take part in the transactions and as a result this leads to delays in transaction processing and also high cost of processing the transaction.

However, the central bank digital currency has the ability and potential and it can simplify currency exchanges by basically enabling and introducing digital exchange mechanisms which do not require too many middle men or intermediaries and as a result the cost of transactions will no loger be that much but rather set at regulated and transparent prices also the inefficiencies will be eliminated and speedy transactions will be facilitated as a result positively impacting global finance.

ENHANCED MONETARY POLICY IMPLEMENTATION

When it comes to impacting global finance in a positive way or offering benefits and advantages that will go a long way in the future, the central bank digital currency has the potential to basically offer, present and facilitate new opportunities for the different central banks of the world to conduct and manage monetary policy in the world and owing to the fact that the currency is not physically or cash the central banks have full control over the policies they make take for instance the governments and the central baks could make policies that states an expiration data of digital currency as a result making people use their money.

Additionally, with the central bank digital currency seeing as the central banks are a centralized organization and body they could monitor economic indicators in real time using the transaction data of the users and individuals digital currency, and as a result allowing for timely interventions also, with the central bank digital currency the policymakers are able to implement targeted measures in monetary policies that would help stabilize economies that would be much appreciated in Nigeria here.

INCREASED PRIVACY AND DATA SECURITY

We all know that regardless of the fact that cryptocurrency is decentralized it doesn't mean that the central bank will become decentralized also and that would basically raise concerns over privacy and data security, especially given the unprecedented visibility central banks would have into the users and individuals personal transactions, and quite frankly the fully digital currency system allows authorities to monitor and track transactions with ease, potentially infringing on user privacy therefore this must be addressed and to address this, countries might adopt varying approaches to privacy and data security.

Basically it is no news to say that some governments are likely to prioritize anonymity features, balancing security with user privacy, while others might want to take advantage and typically leverage the central banks digital currency and the transaction data and information it holds and is able to offer, breaking users privacy rights, keeping illegal oversight all in the name of trying to prevent illegal activities like money laundering and tax evasion just to mention a few and that there would one disadvantage in the advantage of the central bank digital currency.

CONCLUSION

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In conclusion, a summary of all what I said would basically be the discussing and exploring of four significant and noteworthy futures or positive future impacts of the central bank digital currency and if you made the effort to read and go through this post firstly I thank you and secondly I say that you would agree with me that four futures of the central bank digital currency in global finance are as follows; enhanced financial inclusion and accessibility, streamlined cross border payments, enhanced monetary policy implementation and lastly increased privacy and data security.