Central Bank Crypto Currency



These challenging times, we discover right now, also show us some trends for the future.

A huge theme of it is the accelerating digitalization of the society.

One part of it is also our daily payment traffic. In these times many people favor to pay via card or contactless payment method. Another trend which could arise from this behavior is crypto money. Private companies like Facebook are already working on their own currency, but also the chines central bank focused on such a project.

If people talk about crypto money, many think about the Bitcoin hype and all the negative news or concerns about it.

But that’s not what I’m talking about and what I see as realistic. What we could see in the near future is crypto money in form of so called „stable coins“. In contrast to Bitcoin, stable coins are bound to a real asset in form of a specific currency or commodities.

A good example of it is the stable coin called Tether, which participates 1to1 to the USD currency development. Facebooks planned currency "Libra" should be bound to a bunch of developed currency, like the EUR, USD, CHF and more. This kind of crypto currency is something that I think is realistic to get in all parts of the world. With this stable coins this relatively new kind of money gets a real value.


Because of that it will be very important that such currencies will be published and developed by the official central banks.

It would make it relatively easy for the central banks of the world to release this type of currency. If its bound to the local currency of the central bank they could increase or decrease the money supply in form of printing money in paper and digital form, simply said. This could lead to the same stability but more diversification, if the central banks are able to deliver the needed foundation.


I see lot’s of opportunities in this kind of money but also some risks or lets say concerns.

My biggest concern would be the security and the privacy aspect.

In a world where hackers are able to get into the security systems of nations this kind of currency would need very high security standards. The question is if we’re able to deliver this high standard of security in all parts of the world. Moreover many people don’t trust new technologies. So it would be interesting to see if enough people would use this kind of payment method.


But now let’s talk about the opportunities and benefits of an EUR-coin or USD-coin.

I think emerging markets and poor countries all over the world would benefit the most of it. They would be able to get their hands on high liquid and less volatile currency.

If we look to a country like Venezuela where we have hyperinflation, an USD-coin would perfectly fit into their needs to protect the peoples money from high inflation.

It would also make the payment traffic much easier and less cost expensive.

For those parts of the world this additional currency could be a real game changer.


Those coins would also help to decouple the payment traffic from the banks, cause to transfer any money via crypto you won’t need their services anymore.

But to be honest this could also be a reason why such a currency gets a huge criticism by the banking sector. It would make them just a bit less system relevant.

A big theme would also be that transactions become more visible for the law enforcement officers. Of course this is a good thing for the whole society but not everyone want's to give away that room of privacy.


The real challenge for central banks lies in the open, limitless, and anonymous nature of cryptocurrency.

In my opinion this will become the next step in digitalization related to Fiat currency.

© 2021 by Lukas Kuemmerle

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