How will the launch of digital currencies of the Central Bank affect ordinary users?

According to cryptocurrency and blockchain experts, central bank digital currencies (CBDCs) could provideconsumers the ability to make cheaperand fast payments. This form of money will eliminate the need to open an account with a commercial bank and at the same time reduce many of the costs and risks associated with a commercial payment system.

In fact, CBDCs can bring consumers something.more than just cheapened and secure payments. They can speed up cross-border transfers and settlements, however, at the same time reduce the level of monetary anonymity.

In addition, analysts believe that CBDC mayperform another important function that is not oriented towards direct financial or economic benefits. For example, CBDC can neutralize the challenge Libra poses with Facebook, which planned to launch a payment system on top of the world's largest social network, which creates the danger of a new monetary monopoly.

What will CBDC give consumers?

«CBDC will create a new revolution in finance,Said Massimo Buonomo, an expert at the global level on blockchain and cryptocurrencies in the UN Alliance of Civilizations.

Essentially, CBDC will be an analogue of paper money, but only in digital form.

In an interview with Cryptonews.com, Buonomo explained that there would be two different types of CBDC, depending on the region.

• At first,there is a certain “single-level model”. Here, digital money is “transferred directly to the individual from the central bank through the social security system (first option).”
• Secondly,"two-level model". In this case, CBDCs are “transferred to the person through intermediaries (mainly through banks - different options).”

According to Igor Bankex CEOHops, most of the CBDCs currently under development are based on a two-tier model. For example, digital Chinese yuan will be distributed through commercial banks. So it can be with the digital US dollar.

In any case, an important feature for consumers will be that the payment infrastructure underlying CBDC is likely to be developed and managed by the central bank.

«The difference with traditional digital money is that the standard of operational interaction here is maintained at the central bank level,- Khmel noted.

This means that digital money from one bank can go directly to another merchant/bank, avoiding interbank transfers, Visa/Mastercard, SWIFT, etc.»

For Massimo Buonomo, the importance of this process at the consumer level is to reduce costs and increase security.

«Currently, to make an electronic payment, we need a private player (card transaction processing company, bank account, etc.),- he said.

It costs money and the standard is lowsecurity. CBDC will allow us to perform the same digital wallet transactions as electronic payments, but without the cost and with a much higher level of security. This is much more profitable for clients.

No bank accounts

Buonomo further suggested that in many cases, the CBDC would eliminate the need to open an account with a commercial bank.

«With current interest rates, the only advantage of having a bank account is that it allows you to make digital payments»- the expert explained.

With the digital currency of the central bank, “all thatyou need, this is a digital wallet that gives you the opportunity to store digital money and pay bills using your mobile phone without using a credit card. ”

It is important to note that consumers “will not need toPay a fee to companies that process credit card payments (Visa, Mastercard, and even SWIFT). No commissions to banks for bank transfers or for keeping a bank account. ”

Igor Khmel agrees with this, at least in that CBDC will mean for consumers that there is no need for a bank account to make payments:

«For ordinary people, CBDC wallets willalternative to card payments; a faster, safer, and more appropriate payment method for some situations, such as small recurring payments or large transfers such as rent payments, where ACH (Automated Clearing House), wire transfers, or checks are now used.

Billing, Facebook and Competition

Naturally, CBDC will not bring consumers solely benefits. For certain consumers, they may have undesirable consequences.

«CBDC will increase the speed of international payments and reduce monetary anonymity,- said Igor Khmel.

Because CBDCs are traceable and notsuitable for fraud or money laundering, this means that CBDC users will enjoy a world with fewer restrictions and anti-money laundering measures.

Such traceability may not be desirable.for more libertarian-minded consumers who do not want their central bank to register every transaction they make. However, others may appreciate the fact that CBDCs are also used by central banks to prevent the Libra currency from creating a new monopoly on money and payments.

«Facebook's Libra project was the main reason why China began commercial use of the electronic yuan»- added Igor Hmel.

«They had “CBDC FOMO (fear of missing out)opportunity), they feared that the American company would gain first mover advantage in the global race for digital currency. Facebook has 2x the audience of the Chinese central bank, so they can take over the entire market; it has more capacity to accept currency than any other country in the world».

Assuming CBDC will make payments morecheap, Buonomo concluded that "the only way for private players (such as banks and payment companies) to survive in the market will be to provide real value to customers in terms of service or reward for deposits."

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