Dami

Mowalola Ogunlesi is a Nigerian-born, London-based fashion designer. Her work has been featured in publications such as Vogue, Harper's Bazaar, and Dazed

In August 2022, the Reserve Bank of Australia (RBA) announced that it would carry out a year-long pilot project to explore “innovative use cases and business models” for a CBDC.

• Sanctions. The government can use sanctions against companies, blocking their agreements, contracts, money transfers.
• CBDCs could pose privacy and data protection risks, as personal data would be collected and stored in digital form.
• CBDCs could behave subjectan toimpact hackingon andthe cybercrimeeconomy, whichas they could jeopardisepotentially disrupt the security ofexisting users’financial fundssystem.

• Absence of anonymity. The regulator can see all transactions by every user.
• Forced payment. The regulator can take out money from your wallet as tax, fines, etc. without your permission.
• CBDCs could be vulnerable to cyber-attacks, as they are digital in nature.
• CBDCs could be used for money laundering and terrorist financing activities.

• CBDCs could help to increase financial inclusion by providing access to digital financial services to those who do not have a bank account or who are unbanked.
• CBDCs could enable faster and cheaper payments, as they would be processed digitally and would not need to go through the existing banking system.

• The fastest transactions. Digital currency may be transferred directly to the owner by the regulator without intermediaries (commercial banks)
• Reducing maintenance costs of fiat currency. The CBDC doesn’t need to create paper banknotes, transporting in countries, loading in bankomats, changing old damaged bills into new ones, etc.
• The exchange rate is provided by the economy of the government.

• CBDCs could help to reduce the costs of printing and circulating physical currency, and could also make it easier for people to conduct transactions using digital devices such as smartphones.
• CBDCs could offer greater security than traditional forms of payment, as they would be more difficult to counterfeit.

• CBDCs could be subject to hacking and cybercrime, which could jeopardise the security of users’ funds.

Central Bank Digital Currency seems like cryptocurrency but has a few different attributes:

• Centralized issuer. The CBDC can’t be earned by mining or staking like usual cryptocurrencies. Only the national regulator (usually it is the central bank of government) can issue new digital coins.
• Legal status. The CBDC is legal in the country that issued it. In the future it will be legal in other countries.

There are two types of CBDC’s, retail CBDC’s and wholesale CBDC’s. Retail CBDCs are digital currencies that can be used by the general public for retail transactions, while wholesale CBDCs are digital currencies that can only be used by financial institutions for wholesale transactions.

In August 2022, the Reserve Bank of Australia (RBA) announced that it would carry out a year-long pilot project to explore “innovative use cases and business models” for a CBDC.