South Korea's central bank has released its analysis report on the central bank digital currencies (CBDC). The report shows that central banks around the world are turning to CBDCs due to advances in blockchain technology.
Blockchain developments affect CBDC agenda
A report by the Bank of Korea published on Monday, May 8, 2020 revealed that central banks around the world are increasingly interested in developing their CBDCs, and several banks are already making significant progress. The analysis titled “Overseas CBDC Progress Report” attributes global attention to CBDCs to developments occurring in the blockchain industry.
According to the report, the central bank of South Korea has researched and analyzed the work of CBDC projects of many central banks. As a result, the decline in the use of fiat currency and the adoption of distributed ledger technology (DLT) were identified as the main factors driving the development of CBDCs.
The report says:
“MOST COUNTRY OF FUTURE-FOCUSED NEW TECHNOLOGIES; CURRENTLY, THE CENTER IS APPLIED TO THE PAYMENT AND CONTRACT SYSTEMS, WILL BE SEARCHED TO BE APPLIED BEYOND THE BOOK MANAGEMENT AND ACCOUNT-BASED TRANSACTIONS. ”
The report also revealed that central banks researched and developed two different types of CBDC. Banks in France, Hong Kong, Thailand, Canada, Switzerland and Singapore focus on using government-supported digital currencies to manage large sums. In other regions, such as Norway, Sweden, China and the UK, the focus is on using CBDCs for micro-payments.
While most of these central banks are still in the early stages of research and development, China and Sweden both successfully completed the proof-of-concept and passed the testing phase. Similar to China, the Bank of Korea has announced that its main interest will be micro payments to develop its own CBDC. South Korea's central bank, the Code and think of using platforms such as the DLT Hyperledg Fabric.
The importance of micro payments
While these developments are great for the blockchain and crypto ecosystem, the use of micro-payments is something that needs to be finally resolved. Central banks are trying to avoid this dilemma. There are several solutions on the market right now that can handle this problem. Most importantly, IOTA is characterized as the pioneer of micro payment solutions and has already started partnering with vaz hardware manufacturers and the European Union.
Likewise, projects such as IOTA can be used in place of these central digital fiat solutions and can easily be used as international micro payment solutions anywhere in the world.
In any case, the central bank solution for digital assets; It is an opportunity for more digital currencies to become mainstream in the decentralized market. Enabling people to convert their fiat into digital currencies, if not immediately, will encourage many to the crypto economy.
