The central bank of Canada released their draft paper about the adoption of Central Bank Digital Currency and explained their many beneficial facts to use.
Canada’s central bank seems much eager toward adoption of blockchain technology. They are only pointing their eye on the beneficial facts of Central bank Digital Currency. They released their draft paper on Canadian CBDC adoption.
Through a draft paper on Tuesday by Canada’s bank, authors outlined beneficial & positive potential benefits of CBDC adoption. According to them it will be easy to promote their CBDC in the present existing competition because people will see native CBDC as a better choice. And also they can improve their financial structure for their existing user base because there are many boundation in traditional infrastructure. With the adoption of CBDC in the traditional banking system, it will be a better ecosystem for people.
Additionally authors of the paper explained several ways smart contract functionality & improve in the traditional banking system.
“Smart contracts could enable programmable money by adding certain attributes to it. For example, money could be programmed to gain or lose value over time, or it could be programmed to be used in transactions for only specific goods or services.”
They also emphasized on the third party role which will be eliminated after CBDC adoption. According to them it is very costly for people to have trusted third party intermediates in the traditional banking system, so it will be better if they can remove the role of intermediators.
Paper also pointed out that CBDC adoption will bring welfare, reduce welfare losses and lots of innovation in financial Infrastructure to boost the economy of the country.
“A CBDC might be beneficial and probably necessary to ensure a competitive and vibrant digital economy.”
In Papers author considers two main scenarios where the Monetary system may be threatened by the innovative adoption. According to them, if use of Cash will eliminate & adoption of Digital money take place in future then it will bring a problem for the Monetary authorities system. So it will be better to give a choice of native Digital Currency so that they can work according to the demand & needs of their citizens with better balance with their monetary system.
However, banks of Canada already reported a similar kind of paper in 2019, where they talked about many benefits of CBDC adoption.