Speakers at a conference in Dhaka on Thursday said the central bank digital currency (CBDC) might have many opportunities, but it should be progressed very cautiously - as the use of CBDC might include many risks including cyber-crimes.
They focused on political will and ensuring good governance in the financial system to tap benefits from such a new technology-based currency, which is just a digital version of the existing fiat currency.
The Institute of Chartered Accountants of Bangladesh (ICAB) organised the programme - "Transforming Paper Currency to Digital: Taking from and Making of Central Bank Digital Currency" - through virtual platform.
Dr. Salehuddin Ahmed, former governor of the Bangladesh Bank (BB), was present as the chief guest. Md. Humayun Kabir, council member and past president of the ICAB, moderated the session.
Dr. Ahmed said CBDC is not a crypto-currency, and the central banks have control over their CBDCs.
"We should handle the matter very carefully, as it has both pros and cons," he added.
Distinguished panel speakers included Dr. Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID); Maliha M. Quadir, Founding Managing Director of Shohoj Limited; Khondoker Shakhawat Ali, Visiting Fellow of BRAC Institute of Governance and Development (BIGD); and Dr. Mizanur Rahman, Consultant of Enterprise Data Integration and Ex-Director of Data Warehouse Medicare, Australia.
The speakers said cash transactions in banks' branches have gone down by almost half between 2019 and 2022. This phenomenon is spearheaded by the BB's various initiatives, such as Bangla QR, and facilitating cashless payments for small traders.
Besides, Binimoy, an interoperable digital transaction platform, would bring synergy to financial systems.
They mentioned that the most significant gain from the introduction of "e-Taka" is that it would allow the government to track its fiscal disbursement for development and other functional services.
They opined that some public officials take advantage of stealing and accumulating physical money, as it takes time for the government to identify these. But it is impossible to steal the public e-money.
ICAB President Md. Moniruzzaman delivered the address of welcome.
He said, "The People's Bank of China first rolled out the digital version of physical yuan ("e-yuan"). It prompted the European Central Bank (ECB) and the Federal Reserve, among other central banks, to consider issuance of their CBDCs".
Digital Taka can bring many unexpected benefits, like parents would be able to track where their children are spending their money, reducing misuse of funds.
It can be programmed not to be used in certain transactions, like one might not be able to buy illegal drugs or arms with digital money, he added.
Dr. Jamaluddin Ahmed, past president of the ICAB and Chairman of Emerging Credit Rating Ltd, presented the keynote paper.
He said CBDC has the potential to transform the informal economy into a formal one by reducing its size.
Analysis of four digital payment measures has shown their impact on the informal economy, including Bangladesh's trade-related illicit financial outflows, which deepened dollar shortage and persisting loss due to money laundering.
Dr. Ahmed further said the Bank for International Settlement (BIS) is promoting information-sharing and collaboration among the central banks on CBDC research - to explore technological experiments that could facilitate interoperability and cross-border transactions among the domestic CBDCs.
The legal aspects of CBDC are important to consider. Issues on CBDC's benefits and risks are policy consideration for Bangladesh, he opined.
Dr. Mizanur Rahman said political governance is important for such currency.
Khondoker Shakhawat Ali said Bangladesh has achieved a milestone in terms of shifting to e-currency from physical currency.
There are still many financial governance-related issues, including high amount of non-performing loans, which need to be addressed.
He also stressed the need for capacity building, including (availability of) digital devices, for the new currency system CBDC.
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