Countries adopting Central Bank Digital Currencies (CBDCs) and Cryptocurrency need to build flexible and sustainable structures as well as privacy features to get the best of the evolving technology, according to experts who recently conveyed at a virtual forum hosted by the global mobile-first payments infrastructure company, Celo, in partnership with global media company Forbes.
The progress, challenges and prospects for CBDCs and Cryptocurrency was the topic of discussion at the event titled ‘The Future of Central Bank Digital Currencies (CBDCs) and Cryptocurrency’.
“As countries adopt the idea of CBDCs, we should build flexible and sustainable structures that work with different countries according to the problems they are trying to solve. We must also think of “Privacy” when we talk about CBDCs,” Jim Cunha, Executive Vice President, Secure Payments & FinTech, Federal Reserve Bank of Boston said.
Seeing the increasing need for digital currencies and the security of its users, Celo also announced the launch of a new solution called Provo, a value-add sandbox for public and official sector experimentation that allows Central Banks to explore and experiment with central bank digital currencies and other digital assets.
As Central Banks seek to test, iterate and future-proof our global financial system, Provo said it will enable financial and regulatory authorities to test CBDC designs and implementation mechanisms in permissioned and/or permissionless, risk-free environments on their platforms.
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“The launch of the eNaira website by the Central Bank of Nigeria is a step in the right direction and we hope to see more Central Banks, as well as other actors in the Central Banking space, start testing various designs and prototypes of CBDC, be it account or token-based, ” Aliu Musa, Ecosystem Lead for Celo in Nigeria said.
According to Celo, its ecosystem has been focused on having more meaningful conversations, collaborations, and partnerships with the public and official sector at large.
The recent forum by the payment infrastructure company featured a number of its executives alongside a lineup of speakers from the IMF, CFTC, Central Bank of Brazil, Giesecke+Devrient, Federal Bank Reserve of New York, Bank of Canada and BIS Hong Kong who touched on topics such as Shaping the Future of Digital Currencies, The Role of Commercial Banks for CBDCs and Propelling CBDCs from Idea to Reality.
Commenting on the launch of Provo, Musa, “We believe institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action and begin to explore the future of a more financially inclusive world powered by Celo.”
Provo brings together the key elements needed for central and commercial banks, as well as financial and regulatory authorities, to design, issue, and experiment with retail currencies on the Celo blockchain, he added.
According to Musa, account-based CBDCs work like digital bank accounts, but the accounts are held by the central bank rather than a commercial bank. “The value is equivalent to the balance of the account, and the key concern is identification, which will correctly link payers and payees, and check that the payer has sufficient funds to make the transaction.”