Following the COVID epidemic, the financial sector immediately adopted the worldwide digitalization procedure that was necessary to address the sanitary situation.
The fintech sector is still growing quickly, and both the public and commercial sectors have begun to recognize this trend.
The majority of central banks began to consider how CBDCs (Central Bank Digital Currencies) may become a commonplace reality.
They engaged in research into the benefits and drawbacks of introducing them, as well as how this process should proceed and under what type of legal framework.
Even though this was a heated subject before to the pandemic, COVID-19 might be viewed as the moment when it became clear that CBDCs needed to be developed.
Péter Sajtos, Head of the Digitalization Policy Department at the Central Bank of Hungary, and Linardo Martinevi, Advisor in the Office of the Governor and FinTech coordinator at the Croatian National Bank (CNB), to clarify important aspects of the adoption of digital money by governments and how regulators should respond to this new reality.
The first fintech and blockchain event of the CEE Region, Unchain Fintech Festival, will take place in Oradea on July 13 and 14, and both financial professionals will be there to discuss the most recent developments in the sector.
We have had digital money for decades, both as public and private money, but when it comes to introducing the digital version of a country’s fiat currency as retail public money, regulators and market players need to pay special attention to ensure not only the best possible operation of such money but also a strong legal framework.
ALSO READ – Vikas Khanna, The Michelin Star Chef, Is Entering The NFT Arena
This is a major concern
Cross-border payments as well as safer and less expensive payments would result from the introduction of CBDC.
However, there would be certain major dangers that would affect the economy generally and financial stability in particular.
CBDCs provide central banks a means to participate in the global cryptocurrency revolution while still being in charge of monetary policy.
This is due to the fact that CBDCs are a product under centralized management rather than a random token generated by a governmental organization as opposed to a private one.
The adoption of digital money by banks would have many benefits and open up a new era for the payments sector, but before that can happen, regulators must lay the legal groundwork.
As Péter Sajtos points out, they must keep an open mind to innovation in order to see the big picture and make the necessary recommendations for a digitalized market.