Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
Global economists continue to question the implications of blockchain implementation for central bank digital currencies.
Blockchain, the underlying technology of cryptocurrencies like Bitcoin (BTC), is not the right solution for a central bank digital currency, according to an economist at Switzerlandâs central bank.
Carlos Lenz, chief economist at the Swiss National Bank, argued that blockchain-based decentralization features are not efficient for a state-controlled digital currencies like a digital franc, German-language Swiss newspaper The Handelszeitung reported Thursday.
The economist reportedly noted that there is a large number of technological opportunities for building a digital franc. âOne could imagine a direct account with the National Bank. Not that we want to do that, but that would be the simplest form,â Lenz said. Another option could be using blockchain technology enabling digital currency operations without any central authority, he noted. However, blockchain is âvery inefficient,â the economist argued: âI donât think that a decentralized solution is ideal.â
Lenz went on to say that Switzerlandâs central bank currently has no plans to introduce a digital fran. The economist emphasized that the âexisting payment system works well,â and that there is no need for a CBDC in Switzerland. The economist elaborated that thereâs also no risk that the franc could be replaced by other currencies like the euro if Switzerland prefers to stay away from the CBDC development.
The implementation of blockchain technology for state-controlled digital currencies has been questioned by many global financial experts. SNBâs alternative member Thomas Moser argued last year that blockchain use is unnecessary for a retail CBDC as the trust is already provided by the central party of a central bank. However, the SNB was still exploring blockchain-enabled benefits for implementing a CBDC last year.
Related: BIS joins France and Switzerland's central banks on cross-border CBDC project
Despite ongoing arguments on whether CBDC really needs blockchain, the Chinese government continues to experiment with the distributed ledger technology for simplifying CBDC transactions. In mid-June, the Peopleâs Bank of China successfully completed salary payouts in the digital yuan using blockchain technology.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.