The world is rapidly adopting digitization; leading by example is the European Central Bank’s initiative to redo the currency by creating digital euro. The experimental time for the move could be nearly two years. The step will ensure the citizens hold digital central-bank currencies in a short span.
According to President Christine Lagarde, people are eager to protect their privacy, but the bank ensures no adverse consequences, such as money laundering. The bank seems to have a reliable infrastructure that is cost-efficient and reduces energy consumption. “Our work aims to ensure that in the digital age citizens, and firms continue to have access to the safest form of money, central bank money,” ECB President Christine Lagarde said.
The digital currencies pose threats to commercial banks as they find the scenario risky. Since the customers look for safety and convenience, these virtual currencies might take over the banking system, the banks fret. Cryptocurrencies will likely continue to gain popularity in the future, as they have recently emerged strongly. Consequently, Executive Board member Fabio Panetta urged to limit the digital euro holdings of the customers to 3,000 euros to avoid negative interest rates.
As per a report, the estimated global crypto ownership accounts for an average of 3.9%, with more than 300 million crypto users worldwide. Additionally, more than 18000 businesses have adapted to digital currencies.
Within the first few months of this year, Bitcoin has made an incredible journey. With interest rates rising and Tesla’s $1.5 billion investment into the Bitcoin market, the virtual currency has gained credence.
There has been exceptional support offered to Bitcoin by Institutional investors and investment banks, as Tesla, Square, and JPMorgan have committed to adding the commodity and its associated companies in their portfolios.
The cryptocurrency market scale will likely expand from USD 1.6 billion in 2021 to USD 2.2 billion by 2026, at a CAGR of 7.1%.
As crypto trading is decentralized, it helps build cross-border free trades building resilient economies in places where there is currency instability. Millions of consumers benefit from its high-speed, low-cost domestic and international payment services. The breakthrough achievements of cryptocurrencies reshape the finance industry with remarkable trends like Defi, stablecoins, emerging Central Bank Digital Currencies (CBDCs), Non-fungible Tokens, and crypto tax help the investors make the right decisions. Bankers on Wall Street believe digital currencies issued by central banks will disrupt the financial market.