Cenbank unwilling to introduce digital currency now

The Bangladesh Bank is unwilling to introduce a central bank digital currency (CBDC) now as there are no examples of countries that have succeeded in doing so, and digital literacy has not reached a satisfactory level in the country.

The CBDC is similar to cryptocurrencies, with the difference that its value is fixed by the central bank and is equivalent to the country's fiat currency.

Several senior officers of the central bank have given this opinion after several informal studies on the circulation of a digital currency. Last year, a presentation was made by the central bank to the council of SAARCFINANCE, the group of central bank governors of the Saarc member states, on the CBDC.

Md Sarwar Hossain, assistant spokesperson for the Bangladesh Bank, told The Business Standard, "In the budget of the fiscal 2022-23, there was talk of carrying out a feasibility study on the digital currency. However, no formal study has been done by the central bank so far."

A senior central bank official, who did not want to be named, told TBS, "The digital currency should not be introduced immediately. As we have seen, the countries that have introduced this currency are not faring well. Besides, most of these countries are very small in population and size."

"No country with a large economy like Sweden or Canada has introduced it yet, everyone is thinking. We are closely monitoring those issues. Let other countries start first, let a part of their people get used to using it, and if we think it will be good for the country, then we will think about launching CBDC. Not before that," he added.

Taking the example of the Bahamas as one of the countries that have introduced CBDC, he said that the country is small and prone to natural disasters. Many times, people lose their physical currency due to calamities. CBDC was launched in the country with these issues in mind. However, the rate of use of this currency is still very low there.

He said the digital payment system in Bangladesh should be strengthened before introducing CBDC. People still do not understand the benefits of using digital payments. They do not realise that its use ensures the security and on-demand use of resources.

"First we need to get used to using digital payments, then CBDC can be thought of," the official added.

Asked why it is important to get used to digital payments, he said that when CBDC is launched, it should be convenient to do all kinds of transactions through it. It should be ensured that people can use it anywhere in the country.

"So we have to take our digital transaction network to that level. And how will people get used to using CBDC if they are not used to local currency digital payments?" he added.

In his FY23 budget proposal, the finance minister said that as the risky use of virtual currencies such as crypto currencies continues to grow worldwide, many central banks around the world are working to launch digital versions of their currencies as an alternative to crypto currencies. The main purpose of launching central bank digital currency is to facilitate currency in virtual transactions and to encourage startups and e-commerce businesses.

As a result of the time-befitting steps of the present government, the coverage of the internet and e-commerce in the country has increased tremendously. In this context, the Bangladesh Bank will conduct a feasibility study on the possibility of introducing CDBC in Bangladesh, he added.