European Central Bank bets on CBDCs over BTC for mix-border payments

Research conducted recently conducted through the European Central Bank (ECB) on identifying the best mix-border payment medium topped central bank digital currencies (CBDCs) as the champion against competitors, including banking, Bitcoin (BTC) and stablecoins, amongst others.

ECB’s curiosity about identifying the very best mix-border payment solution comes from the truth that it can serve as the central bank from the 19 Eu countries that have adopted the euro. The research, “Towards The Ultimate Goal of Mix-border Payments,” known Bitcoin because the most prominent unbacked crypto asset.

EBC’s opinion of Bitcoin like a bad mix-border payment system boils lower towards the settlement mechanism from the highly volatile asset, adding that:

“Since the settlement within the Bitcoin network occurs only around every 10 mins, valuation effects happen to be materializing right now of settlement, making Bitcoin payments really more difficult.”

As the study highlighted Bitcoin’s natural scaling and speed issues, it unsuccessful to think about the timely upgrades — Taproot and Lightning Network — that enhance the network performance, concluding that “The underlying technology (especially its ‘proof-of-work’ layer) is inherently costly and inefficient.”

However, the ECB recognized CBDCs like a better fit for mix-border payments because of greater compatibility with foreign exchange exchange (Forex) conversions. Two major advantages highlighted in connection with this would be the upkeep of financial sovereignty and the simplicity of instant payments via intermediaries for example central banks.

Related: Australian central bank governor favors private sector crypto technology

Contradicting the ECB’s reliance upon CBDCs, Australian central bank Governor Phillip Lowe thought that a personal solution “is likely to be better” for cryptocurrency as lengthy as risks are mitigated through regulation.

Mitigating risks associated with crypto adoption could be fended off by strong rules and condition backing, mentioned Lowe, adding:

“If these tokens will be used broadly through the community, they will have to be supported by the condition or controlled just like we regulate bank deposits.”

In Lowe’s view, private information mill “better compared to central bank at innovating” the very best features for cryptocurrency.

Latest stories

You might also like...