The technological advances that society is experiencing are also being translated into the financial sphere, where cryptocurrencies and digital currencies issued by central banks (CBDC, for its acronym in English) predict a wide transactional universe for the years to come.
(Read: The bolívar lost half its value after a year of reconversion).
In a recent report by the International Monetary Fund (IMF), the institution collected the progress that different central banks around the world are having in the face of CBDCs and the challenges that they must put the magnifying glass on, among those, cybersecurity.
First of all, it is necessary to clarify that CBDCs are the digital versions of their physical counterparts issued and regulated by central banks, a factor that it subtracts the uncertainty of volatility and security that their counterparts, cryptocurrencies, can generate.
According to a count by the Atlantic Council’s Central Currency Tracker evidence that currently There are more than 112 developing countries, studying or putting into practice their digital monetary version.
“But it wasn’t until recently that research on CBDCs proliferated globally, fueled by technological advances and declining use of cash. Central banks around the world are now exploring their potential benefits, including how they improve the efficiency and security of payment systems.”, said Andrew Stanley, member of the staff of Finance and Development of the financial institution.
According to the count of the Atlantic Council, the 112 countries are divided in this way: 11 have already launched their initiative (ten of them in America); another 15 develop pilots; 26 countries are developing; 46 more are investigating; a dozen is inactive and two others canceled it.
It is important to highlight that among the ten projects that are already present in America, the case of the Eastern Caribbean Central Bank (ECCB) stands out, with the ‘DCash’ initiative, the digital version of the Eastern Caribbean dollar, the common currency shared by Antigua and Barbuda, Dominica, Grenada, Saint Kitts and Nevis, Saint Lucia, and Saint Vincent and the Grenadines; and Anguilla and Montserrat.
(Also: Technological regulation, among the needs of the digital age).
The other ongoing projects are in Jamaica (Jam-Dex) and Bahamas (sand dollar).
The largest number of countries is in the group that is investigating the benefits of these digital currencies. Among those are Colombia, Chile, Peru, USA, Mexico or the UK itself.
“While a CBDC may have many potential benefits on paper, central banks will first need to determine whether there is a compelling case for adopting them, including whether there will be enough demand. Some have decided no, at least for now, and many are still grappling with this question,” researcher Stanley said.
Be careful what Wi-Fi networks you connect to.
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The International Monetary Fund expert points out that central banks must evaluate “very well” the risks that can trigger the issuance of these currencies, such as a financial crisis or a reinforcement of its cybersecurity systems to avoid massive attacks.
“Users can withdraw too much money from banks at once to buy CBDC, which could trigger a crisis. Central banks will also need to weigh their ability to manage the risks posed by cyberattacks, while ensuring data privacy and financial integrity.a”.
Now, the level of risk will depend on the variant of digital currency that the central bank chooses, since each of the models provides different properties in scalability, network requirements or user privacy.
(See: Central bank for cryptocurrencies? This is the proposal under study).
Depending on the choice of this design, some of the future risks may include increased difficulty in reversing fraudulent transactions; an increase in dependence on third parties or a reduction in the regulatory supervision of financial entities.
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