Bank of Canada says there are risks when using a cbdc
The financial institution, through a study, assures that there are two problems that could arise in the use of digital currencies backed by central banks
The Bank of Canada recently assured, through a study, that there is a percentage of risk associated with the use of digital currencies backed by central banks (cbdc).
According to what was published this week, written by the professor of the University of Illinois Charles Khan and the representative of the financial institution Francisco Rivadeneyra, there is a risk and several problems when implementing this type of assets in substitution of fiat money.
Although the document does not represent the official institution on the part of the Bank of Canada, the document states that “the security of a cbdc will depend on the competition between solution providers and the interaction of the individual security protocols chosen by each provider.”
Based on this statement, the authors defend the theory that the main risks are associated with the management of private keys and the custody of third parties.
The first point is that, in case the owners of the capital lose their password, they could go to a branch and prove to be who they claim to be, however. In the case of digital currencies the capital is stored in their software installed in a smart device that and in the event of a hardware failure this could compromise operations.
On the other hand, the authors of the writing emphasize that things are complicated in terms of third-party services, such as wallet providers or regulated exchanges, which could operate as a bank in terms of capital management. But, unlike these, nothing forces to manage insurance to back the money of users.
K. Tovar
Source: DiarioBitcoin
