The COVID-19 pandemic has forced many states to accelerate efforts to create a national digital currency (CBDC).
A study by Guardtime notes that central banks’ activities to launch their tokens have accelerated by about five years. And we will see the emergence of the first CBDCs within the next three years.
The coronavirus pandemic has created conditions under which many tech startups have emerged that specialize in the creation of blockchain products and telecommunications platforms.
Central banks involve such companies in the development of digital currencies. Currently, startups are already helping some countries to significantly shorten the time to deploy CBDCs.
Guardtime analyst Luukas Ilves stressed that the coronavirus has accelerated not only the digitalization of society, but also changed the way money is used.
According to the expert; against the background of pandemic, states began to urge people to work remotely and appear less often in public places. In parallel, the number of online payments began to grow rapidly.
China is a leader in CBDC
China directly avoids regulatory uncertainty, and its government immediately turned its attention to the benefits of CBDC. Despite the coronavirus, the Chinese have accelerated development. The pilot program now includes McDonald’s and Starbucks in digital yuan trials. While the world lacks digital money, fintech applications, China is only a few steps away from a massive CBDC deployment.
In April, many central banks announced plans to experiment with their own cryptocurrencies. The Bank of France officially launched a digital euro pilot program, and a week later, South Korea’s central bank announced a similar plan.
Digitization of national currencies and increase in stablecoin reserves
It seems that digitized national currencies and the acceptance of public cryptocurrencies are closer than we think. Also, after years of ICOs and scams, illegal players are leaving the blockchain scene. Now it looks like a new wave expected, led by stablecoins and DeFi.
Coin Metrics research points to the growing role of stablecoins amid rising crypto fees and volatility, especially after the collapse of traditional markets and Bitcoin’s decline to its March low. Note also that the outbreak of COVID caused the stock of stablecoins to start growing.
The world has changed a lot over the past few months. We saw and realized the benefits of anything that can be done remotely. Online conferences have become a whole trend and people have seen the opportunity to work from the comfort of their homes. In no time, it became the norm.
Microsoft announced that the growth in the number of remote workers has led to a rapid increase in the use of its cloud services (+ 775%) in regions where strict social distancing rules have been introduced in connection with the coronavirus.
Analysts at JPMorgan noted that the Zoom app is now in higher demand (+ 300%) than ever before, as the pandemic has forced many workers to stay at home.
Central banks around the world have accelerated work on a central bank digital currency (CBDC) in response to Covid-19 and its impact on the use of cash. Although a year ago they did not plan to do this.