SWISS Central Bank Economist Argues Blockchain Technology Not Ideal for CBDCs

According to the Swiss National Bank Chief Economist Carlos Lenz, central bank digital currencies (CBDCs) have little structural advantages to derive from decentralized aspects of technology.

Lenz claimed that it is highly inefficient to blockchain, which nullifies the ideal solution of CBDC decentralization. Besides the technology for blockchain, Switzerland has also claimed that because of its 'inefficiency' there are technical possibilities for its CBDC.

"A direct account with the National Bank might be imagined, not that we wish to, but the simplest form. Or on a blockchain where there's no central government you may rely on totally decentralized solutions. But blockchain is highly ineffective. A decentralized solution is not optimal, I do not think."

The Swiss Central Bank also trusts that if Switzerland does not choose to create a CBDC, the Swiss franc is not in any risk of being supplanted by other euro currencies.


'While the euro was adopted, we had such conversations. It was also worried that payments will be made in euros unexpectedly. This hasn't happened, though."

Swiss National Bank: No Digital Franc Planning

Although the Swiss National Bank (SNB) is investigating a digital franc at the moment, Lenz claimed that no preparations are being made for one in the nation shortly since present payment methods operate effectively and so no digital franc is required.

"No preparations to introduce money from digital central banks are presently being made. This is also the case in the mainland."


On 10 June 2021 the SNB and the Banque de France joined up to establish a transfrontier wholesale CBDC system known as the Jura Project, known as a Bank for International Settlements Innovation Hub.

"Two large CBDCs and a French digital financial instrument will be included in this trial on the DLT platform.

The statement states that the initiative is purely a curiosity experiment and an inquiry which neither central banks should misunderstand as a guarantor of CBDC development.

"It is exploratory and should now be regarded as indicating that the Swiss National Bank's Banque de France wants to provide CBDC wholesale."


The SNB also participates in another study, the Helvetia Project, which examines the disposal of tokenized assets with the wholesale CBDC and considers the Jura Project as an increase of its growing interest in new technologies.

"Technological advances are necessary for central banks to remain up to date."
CBDC interest continues to increase

ConsenSys describes a central bank digital currency as a digital asset based on a digital bookmark supported and managed by a central bank. Ethereum's Blockchain engineering firm ConsenSys More than 70 per cent of corporate and government organizations are actively investigating and developing CBDC concepts, according to ConsenSys.

CBDC is the most sophisticated and practical CBDC in China to date. To date. Built using DLT, the concept of decentralization has little or nothing to do with it, the fundamental technology of blockchain.

Analysts claimed that Chinese DCEP's success in electronic digital currency payment may be a basis for other central banks seeking to build their own CBDS without losing complete control over their national currencies.

 

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Blockchain Technology Not Ideal For CBDCs, SWISS Central Bank Economist Argues. By. Bernice Nyambura. -. June 27, 2021.
Blockchain Technology Not Ideal For CBDCs, SWISS Central Bank Economist Argues. U.S. Struggles To Keep Up As China Further Develops ...
Blockchain Technology Not Ideal For CBDCs, SWISS Central Bank Economist Argues. Republished by Plato. Published. 2 hours ago. on. June 27, 2021.
Central bank digital currencies (CBDCs) have little structural benefits to draw from decentralized features of blockchain technology.

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