CBDC Developments Since the FTX Fallout

Vignesh Karunanidhi
CBDC Developments Since the FTX Fallout
Source: Current Affairs- Adda247

Central Bank Digital Currency (CBDC) is generally the digital currency issued by a central bank. It can differ from one nation to another. CBDCs are pegged to the currency of the particular currency of nation.

CBDCs are considered a less volatile and regulated form of cryptocurrencies. Traditional cryptocurrencies, which are much more volatile than their “less-risky”, centralized counterparts, are expected to live alongside by Central Bank Digital Currencies, or CBDCs. Moreover, many are of the notion that CBDCs will not replace all cryptocurrencies. The primary reason is that this belief beats the main feature of true decentralization of cryptocurrencies and Web3.

The collapse of the FTX exchange has prompted global regulators to intervene. It has also highlighted the necessity of pushing CBDCs out to the public.

Will CBDC developments speed up post-FTX collapse?

Singapore has made quite a stir in the cryptoverse. During this time, the Monetary Authority of Singapore [MAS] was investigating central bank digital currency, or CBDC. According to a recent report, MAS has embarked on a new journey to investigate the prospects of CBDC for cross-border transactions.

While cryptocurrency has been ruled out for India, the government appears to be incorporating a Central Bank Digital Currency [CBDC]. The Reserve Bank of India [RBI] announced in October that a wholesale CBDC pilot would begin on Nov 1. The country was also true to its words and followed the same.

The Bank of England’s deputy governor, Jon Cunliffe, recently commented on the need for a digital pound. The question of whether a digital pound should be issued interestingly followed the demise of FTX.

Even though the fall of FTX and Central Bank Digital Currencies doesn’t have a direct correlation, the necessity has definitely been triggered by the FTX scandal. It is likely that more nations and central banks will come up with their CBDC plans in the near future.