There have been discussions, since 2014, concerning central banks and the issuance of digital payment vehicles. The formal term, Central Bank Digital Currencies (CBDCs) are at the center of most of the discussions, which the Bank for International Settlements (BIS) and the International Monetary Fund (IMF) are heading.

There has also been growth in the use of blockchain technology by central bankers. The trouble is, for any headway to happen, consumers need to use blockchain technology and retailers need to adopt the payment systems to facilitate the process. As things stand, the manner of which consumers use payment systems differ from country to country, making it difficult for universal adoption.

A research report issued by R3 JP Koning has evaluated what it would be like if CBDC were to be issued by Brazil’s banks. Analysts reviewed the Brazilian economy and the structure of banking entities to determine whether the approach is viable.

The study’s author also questions the three types of systems that can work in a CBDC realm: central bank accounts, dash-like digital instruments, and ac combination of the two.

The teams heading development of a digital central bank have turned to blockchain technology. In a white paper released by Project Jasper’s Phase Three, which is a collaborative efforts between various banking entities, the review focuses on wholesale payments. Such payments are similar to interbank payments and such an approach seem to be limited in scope, even though they offer a great deal of solid benefits over the long term.

Even though it is beneficial to focus on wholesale payments, other areas are ideal for innovation, such as retail and consumer payment systems.

At the third level, it is important to look at CBDCs at the consumer level. It seems that more and more consumers are looking at digital payment options as a viable approach. The trick, for those who are heading the operations, is to grow digital solutions on existing financial market infrastructure.

At the end of the day though, the process is one that takes time and a strategic approach.

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