When bitcoin arrived on the scene back in 2009, traditional banking institutions were unreceptive to its potential. For the most part central banks worldwide considered it a one-day wonder; something that would stir up interest and publicity for a while and then disappear into the weeds.
That, of course, has not happened. Digital currencies have become more stable and safe as the technology of blockchains and other safeguards improved.
And so central banks began taking digital currency seriously this past year. They are not moving at a particularly fast pace in embracing this new mode of currency, and with the current pandemic throwing financial institutions into chaos it still may take a long time before the big central banks like the Bank of Canada, Bitcoin to Western Union, the Bank of England, the European Central Bank, the Bank of Japan, the Swiss National Bank, and the Sveriges Riksbank, fully embrace the use of digital currencies in their financial dealings.
But they know that digital fiat currencies are here to stay, and can offer significant opportunities for profit. Plus, with the global emphasis now on social distancing and minimum physical contact, it just makes sense to handle actual circulated cash and coins as little as possible. Even plastic debit and credit cards are now suspect in the spreading of the new coronavirus.
And the differences between electronic currency transactions and digital currency transactions is fast diminishing to the vanishing point.
Facebook’s attempt at their own digital currency, Libra, last year, though laced with setbacks and inconsistencies, was a wakeup call to the global central banking system. If private business was launching full tilt at digital currency, then bankers began worrying that they might be left behind in the seeming landslide of digital currency venues that could swallow up a good portion of the liquid cash reserve worldwide.
Central banks have always been semi-independent entities in the past — a government of its own inside the larger government of their own country. But with digital currency, all that could change. Every country with a serious digital currency presence has passed dozens of laws and regulations about the use and storage of digital currency — and central banks will be held accountable to these new and complex regulations as they begin offering digital currency services to their clients. This takes away much of their valued flexibility and independence.
The bottom line right now seems to be that global central banks will continue to cautiously open up some digital currency opportunities for customers, while at the same time doing their own R & D on the subject until they’re satisfied with its safety and utility.