Central Bank Digital Currency or CBDC’s impact on the banking sector is going to amaze investors. As we know, CBDC will bypass the third-party banks. The Central Bank will generate the digital currency with blockchain technology or cryptography, and these tokens will be available to use by the end user.
- CBDC will ruin long-term banking investments.
- Money Laundering And Inflation Will Be Under Control.
Central Bank Testing CBDC Pilot Projects
All central banks are testing their own central bank digital currency pilot project. The Reserve Bank of India has started the testing of its CBDC project along with the State Bank of India, Punjab National Bank, Bank of Baroda, and Union Bank of India.
Some time ago similar news has come out from Iran, Russia, and Australia. Russia makes it clear that in the coming times, central bank digital currency will be used for international trade.
All this news that is coming out from all over the world has increased the concern of investors because somewhere there is an attempt to bypass the banking system. In other words, the entire banking system is going to be upgraded, and it is the beginning of new technology.
We all should wholeheartedly welcome the new technology, but should also take care of the concern of the investor. In the Indian stock market, discussions are going on mostly about banks nifty and nifty50.
Bank Nifty, is likely to see a major downfall after CBSE is successful. Understanding the downturn of the market can be performed well in the coming times as well.
To understand the impact of CBDC on the banking sector, we have to understand the working methodology of the Central Bank.
Current Banking System
According to the current banking system, the monetary system in any country is controlled by the Central Bank only. The central bank has the authority to print money, and only money issued by the central bank is considered real money.
This money is handed over to other banks present in the country, after which the service and promises of the bank work. Then somewhere the money reaches a common citizen.
Central Bank: Real Money: Banks: Service & Promise: End User.
CBDC Banking System
CBDC system will bypass all intermediary banks and their promises. Here, the digital currency will be generated by the Central Bank through Blockchain technology and will be given to the customer.
Central Bank: CBDC: End Users
CBDC Impact on Banking Sector Investment
CBDC Will eliminate the banking role as money can be controlled through a mobile wallet. The Central Bank will generate CBDC, and it will be handed over to the citizens of that particular country.
People will use banking services without banks. The mobile wallet will behave like a bank. This currency could be used through mobile SMS service and no internet connection will be required for sending money to anyone.
Investors have to be cautious about the upcoming Bank Nifty investment. CBDC will solve multiple issues like corruption, money laundering, and robbery.
What happens now is that anyone can take any amount of money anywhere, and it seems impossible to track where this money has come from.
But when we talk about digital currency, here everything is recorded in the ledger and even if one of your tokens has gone from which wallet to which wallet, everything gets recorded in the record of the blockchain.
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