Most central banks world-wide are planning to issue their own digital currencies in the coming period in keeping with Bitcoin.
According to the Bank for International Settlements, an international financial institution, 86% of central banks are looking into mechanisms for issuing “central bank digital currency” (CBDC)s.
Cryptocurrencies has witnessed record rates recently. This prompted several central banks to announce their intention to issue their own digital currencies. The move comes in light of the Coronavirus pandemic and as many stopped dealing in regular currencies.
Central banks digital currencies
Italian Central Bank Deputy Governor said moving away from digital trading intensified interest in digital currencies.
The People’s Bank of China has conducted three tests for its digital currency. the Indian Central Bank seeks to issue its national digital currency, and has taken a decision to completely ban cryptocurrencies.
Bank of Canada Deputy Governor said efforts are being intensified to issue a Canada’s “Digital loonle”. As well as, the Russian Central Bank is working to launch the digital ruble.
Market value rises
The market value of cryptocurrencies was between $1 trillion and $1.2 trillion in 2020. It reached $ 1.4 trillion in January, before falling again.
Bitcoin alone accounted for from 60-80% of the market value of cryptocurrencies.
Unlike cryptocurrencies, which are considered illegal, central banks digital currencies are legal and centralized.
Cryptocurrencies derive part of their strength through statements of some companies that accept to deal in and invest in them.
Earlier this February, Bitcoin rose at historic levels, after Tesla announced that it had invested more than $1.5 billion in it. The company said it would accept it as a way of payment.
Tesla is the first company in the world to announce its investment in digital currency. The announcement which was enough reason to push this currency to achieve unprecedented gains.
Bitcoin’s gains have also jumped since the beginning of 2021, by more than 40% to reach more than $46,000 before decline.
Tesla’s announcement to invest in the currency made a major contribution to these gains.
Observers attributed Tesla’s decision to invest in the cryptocurrency, to its possession of cash liquidity levels of more than $19 billion. They also said that might aim to achieve profits during the coming periods.