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Alternative Market Briefing

IBM study finds central banks are embracing concept of digital currencies, smart contracts

Friday, October 26, 2018

Laxman Pai, Opalesque Asia:

The majority of global financial institutions surveyed said that central banks should consider issuing state-backed digital currencies, revealed a joint report by IBM and OMFIF.

The Official Monetary and Financial Institutions Forum (OMFIF) and IBM survey of 21 central banks, which ran from July-September 2018, revealed that 54% of respondents believe central bank digital currencies (CBDCs) can be used to improve the speed, efficiency and resilience of cross-border payments.

Around 69% found significant issues with existing cross-border transaction processes, it said.

A CBDC is a digital form of fiat money, which is a currency established as money by government regulation. CBDCs differ from "digital currencies," which are not issued by the state and lack the regulations of a government.

All respondents are optimistic about the use of smart contracts, since this affords central banks flexibility in payment and settlement processes, such as what form a token would take and who the backer would be, the survey said.

69% of those surveyed stated that system resiliency has become an increasing priority for central banks.

Needed: Unified CBDCs

The report also explains the purpose of unifying CBDCs, as well as the motivations and business use cases for central banks to adopt digital currencies.

It outlines key characteristics of such a system, including: who the developer and issuer should be, the technolog......................

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