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Digital Banking Improves Currency Stability Because of Greater Efficiency

Updated: Jun 9, 2023

Digital banking, true digital banking is here, like everything else. Central bank digital currency CBDC is aiming to create a digital currency that has stable value. The reason a government can do that is because it has a stable economy, an economy that gets people to spend money and pay taxes. The US dollar has been a relatively stable value because the economy is so strong.

A CBDC will support faster and cheaper cross-border payments. The settlements process moves from two days to several seconds, creating less costly, more efficient cross border settlements process. The CBDC is the pin-ultimate digital advance, digital currency. The aim is to create a stable value digital currency that can be used for cross border settlements.

95% of the world’s central banks are at varying stages of developing a CBDC. These include the US Central Bank, People’s Bank of China, the European Central Bank, and the Bank of England. Each central bank is forging individualized plans for digital currencies. There is no common format.

Authorized users of wholesale bank transactions include issue, redeem, access request, and transfer. Transactions appear on a dashboard with a timestamp. The counterparty is visible on the transaction dashboard panel. Decentralized Liquidity Exchange: Authorized users of a wholesale bank can make an offer for a currency pair, and broadcast it to the network for an off-ledger exchange, or spot exchange.

Governments have never had a monopoly on the provision of money. Private systems – unbacked by the government or deposit insurance – regularly sprang up in the past, often to service discrete communities. In the US in the 1800s, for example, railroad and canal companies paid workers in paper “scrip,” redeemable for goods at sponsored stores.

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