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How CBDCs Can Coexist with Bitcoin and Asset-Backed Stable Currencies

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According to reports, when asked how CBDCs issued by potential countries will coexist with Bitcoin or asset backed stable currencies, Katie Fortune, head of CBDC at the Bank of Eng

How CBDCs Can Coexist with Bitcoin and Asset-Backed Stable Currencies

According to reports, when asked how CBDCs issued by potential countries will coexist with Bitcoin or asset backed stable currencies, Katie Fortune, head of CBDC at the Bank of England, said that a unified payment ecosystem can promote innovation and bring “new use cases as needed.”. She believes that in the world of stable currency and other digital forms of currency, owning a central bank digital currency can become a bridge asset between all these different forms of currency, which can be really powerful. This unity is “just a social good” rather than “some kind of government control issue.” This is similar to the services and infrastructure already provided by the authorities, “allowing others to do what they need to do and innovate for the future.”.

Head of Bank of England CBDC: CBDC can become a “bridge asset” between other digital currencies and TradFi

The idea of a central bank digital currency (CBDC) has been gaining momentum in recent years, with several countries exploring the possibility of issuing their own digital currencies. However, a question that arises is how these CBDCs will coexist with existing cryptocurrencies like Bitcoin and asset-backed stable currencies. In this article, we will explore the views of Katie Fortune, the head of CBDC at the Bank of England, on this issue and discuss how a unified payment ecosystem can promote innovation and bring new use cases as needed.

What are CBDCs and how are they different from other digital currencies?

Before we delve into the issue of how CBDCs can coexist with other digital currencies, let’s first understand what CBDCs are and how they differ from other digital currencies. CBDCs are digital versions of fiat currencies that are issued and backed by central banks. They are designed to be used as a medium of exchange, just like physical cash, and can be stored in digital wallets, accessed through mobile phones or other devices.
Unlike other digital currencies like Bitcoin, which are decentralized and operate on a peer-to-peer network, CBDCs are centralized, and their issuance and supply are controlled by central banks. Additionally, unlike Bitcoin, which is subject to wild price swings, CBDCs are expected to be stable in value and can be used for everyday transactions.

Coexisting with other digital currencies

The question of how CBDCs can coexist with other digital currencies has been a subject of debate and discussion in the crypto community. Some believe that CBDCs could pose a threat to existing cryptocurrencies, while others see them as complementary to each other. Katie Fortune, the head of CBDC at the Bank of England, believes that CBDCs can become a bridge asset between different forms of currency, including stable currencies and other digital forms of currency.
In an interview, Fortune said that a unified payment ecosystem that brings together different forms of currency can promote innovation and bring new use cases as needed. Fortune believes that owning a CBDC in a world of stable currencies and other digital currencies can be a really powerful tool. This is because CBDCs can act as a bridge between these different forms of currency and facilitate transactions between them.
Fortune also points out that the goal of a unified payment ecosystem is not to exercise government control but to promote a social good. She likens it to the services and infrastructure provided by authorities that allow others to do what they need to do and innovate for the future.

Promoting Innovation

The idea of a unified payment ecosystem that brings together different forms of currency can promote innovation in several ways. First, it can make cross-border transactions faster, cheaper, and more efficient. Using CBDCs to settle cross-border transactions can eliminate the need for intermediaries, reducing transaction costs and increasing speed.
Second, a unified payment ecosystem can promote financial inclusion by providing access to digital currencies to people who do not have access to traditional banking services. CBDCs can be used to provide financial services to unbanked populations, enabling them to participate in the digital economy.
Third, a unified payment ecosystem can promote innovation in the use of digital currencies. By bringing together different forms of currency, developers can create new use cases and applications for digital currencies that were previously not feasible.

Conclusion

In conclusion, the question of how CBDCs can coexist with other digital currencies is an important one, and there are no easy answers. However, Katie Fortune, head of CBDC at the Bank of England, believes that a unified payment ecosystem can promote innovation and bring “new use cases as needed.” She argues that in the world of stable currency and other digital forms of currency, owning a CBDC can become a bridge asset between all these different forms of currency, which can be really powerful. This unity is “just a social good” rather than “some kind of government control issue.”

FAQs

1. What is a CBDC?
A CBDC is a digital version of a fiat currency that is issued and backed by central banks.
2. How does a unified payment ecosystem work?
A unified payment ecosystem brings together different forms of currency, including CBDCs, stable currencies, and other digital forms of currency, and promotes innovation and new use cases as needed.
3. How can a unified payment ecosystem promote financial inclusion?
A unified payment ecosystem can provide access to digital currencies to people who do not have access to traditional banking services, enabling them to participate in the digital economy.

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