According to analysts consulted by PLATFORM, the advantages of using a digital currency issued by a Central Bank (CBDC) are many and varied, including greater financial inclusion and the prevention of financial crime.
For r.Oriol Caudevilla, Board Director at the Global Impact FinTech Forum (GIFT), it is necessary to clarify the major differences between a CBDC and cryptocurrencies. “A CBDC is the digital form of a fiat currency, but it is still fiat. Cryptocurrencies are not issued by a central bank and are not fiat money or real money of any kind, but only digital assets or an investment asset class.”
Being issued by the state, CBDC offers greater stability and security, with the president of the Macau Digital Asset Interflow Association, Robby Kwok, stressing that unlike cryptocurrencies, which can be highly volatile, e-MOP “will provide a reliable monetary option”.
CBDCs guarantee, for example, greater flexibility in the implementation of monetary policies, allowing central banks to inject liquidity directly into the economy, bypassing commercial banks. “This can significantly simplify economic interventions during financial crises,” Kwok points out.
On the other hand, “by allowing a direct influence on the money supply, CBDC can increase the effectiveness of monetary policy,” notes Kwok. However, he warns that the financial ecosystem itself may resist the changes brought about by a CBDC, due to the impact it would have on existing commercial banks and payment platforms. “If people prefer to hold CBDC directly, traditional banks may struggle to stay relevant.”
The digital finance expert also highlights the potential of e-MOP in promoting financial inclusion for people without access to banks, offering a route to access essential financial services. “In addition, its traceability will help combat illegal activities, making transactions more secure.”
Security Measures
Due to its specific format, security is one of the major concerns when it comes to the use of digital currencies. According to Kwok, the e-MOP will take full advantage of state control and regulation. “With strict supervision, the risk of fraud will be minimized,” he says, noting that blockchain technology—originally created as the foundation for cryptocurrencies like Bitcoin—is another element that can enhance security in its use and ensure the integrity of transaction records.
“Cybersecurity will be crucial,” he warns. “Any vulnerabilities could undermine public trust and hinder widespread adoption.”
However, the balance between security and user privacy presents another challenge. “While traceability is necessary to prevent illegal activities, we must also ensure that users’ privacy is protected. Features that allow a certain degree of anonymity can be implemented to address these concerns.”
Caudevilla shares the same opinion, noting that any challenges in implementing a CBDC in Macau will depend on the specifics of the project. “While the e-MOP has the potential to improve financial inclusion and make payments more efficient, careful consideration of Macau’s unique context is essential.”
