"Central Bank Digital Currencies and Their Implementation Challenges"

Assalam O Alaikum

Hello, dear friends! Well, come to my post. How are you all? I hope you will be doing well, by the grace of Almighty Allah. I'm also fine and enjoying my day. Today I'm here to share my knowledge with you about the topic "Central Bank Digital Currencies and Their Implementation Challenges" in this Steem Alliance community. So let's start without any further delay.

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What are Central Bank Digital currencies (CBDCS)

Friends, as we all know, we are currently living in an era of the digital world in which every country wants to provide all kinds of facilities to its people in a digitalized manner. So in the realm of finance, economics, and other financial services, technology has a vital role. In this regard, the central bank's digital currencies have an integral role in revolutionizing the people of that country.

Yes, the central bank Digital currencies are the currencies that are issued by the central bank of that country, and they are similar to crypto currencies. Their values are also fixed by the central bank of that country, which may be equal to the fiat currencies of the country. The main aim behind the creation of digital currencies is to reduce the risks of fraud, theft, and other mischievous acts on the digital markets.

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Freepik

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CBDCs are also virtual currencies, the same as cryptocurrencies, but they are not operated on blockchain technology or decentralized systems. This is because they are all controlled and issued by the central bank of the country. In most cases, CBDCs are found in their two major types, i.e., whole sale, retail central bank digital currencies.

The central bank distributes retail CBDCs to people who want to deal with household projects and run their small businesses through the CBDCs. On the other hand, the whole CBDC is issued and granted to the financial institutions, in which all the infrastructure of CBDCs is controlled by the central bank.

Implementation challenges of CBDCs

Now a days, the use of central bank digital currencies is increasing globally, and every country wants to utilize the CBDCs in order to provide more quick and fast financial services through the CBDCs. This is because they provide great security and anonymity to the people validating transactions. But besides having a lot of positive things, the CBDCs also have a dark side, as many people and countries are facing issues regarding their implementation. So let's have a look at them.

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Freepik

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• Many people think that CBDCs are also operated on the blockchain and decentralized technology, but this is not true. So that thing creates problems for them.

• The people may also face challenges regarding the infrastructure of the CBDCs as they are not operated by a single authority, which means that they can face difficulties in doing transactions through CBDCs.

• The central bank aims to provide all types of security, but sometimes different types of cyber attacks and security issues may occur, which can lose the trust of people in CBDCs.

• The interoperability challenges may also be raised because people try to do cross-border transactions, which may create difficulties for them due to the lack of cooperation and standardization of other countries.

Conclusion

Friends, in conclusion, the CBDCs are revolutionizing the whole world, and that is, almost 134 countries have issued their own central bank digital currencies, which shows the positive face of the CBDCs. Also, we can keep them in our wallets instead of keeping them in our pockets in the form of notes. Anyway, CBDCs provide us with a high level of privacy, anonymity, a way to make payments through digital means, and many other advantages. So, friends, in that article, we have discussed the CBDCs, and I hope it will be helpful for you.

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Written by @abdullahw2

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Thanks All 💗

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