Home ›› 09 May 2023 ›› Front
Monetary system experts and technologists at a seminar on Monday called for strengthen cashless society first in Bangladesh instead of go for a central bank digital currency (CBDC) system right now.
There is no alternative to CBDC as it will be very prominent in the global financial system in the coming decades but there are lots of challenges to adopt the CBDC system.
They said there will be further experimentation of the CBDC across the world, which will establish it as an important solution to emerging needs and increasing digitalisation needs.
They came up with the remarks at a seminar titled “Economics of Central Bank Digital Currency: Transforming Paper Money to Digital” organised by the Bangladesh University of Engineering and Technology (BUET) and Emerging Credit Rating Ltd at the BUET.
They also sought policy and legal frameworks to digitalise transactions.
Comptroller and Auditor General Mohammad Muslim Chowdhury said the transaction costs, printing cost of hard currency and environment pollution will be reduced through CBDC but there are challenges to introduce it.
“Legal issue is big problem along with people’s privacy, central security even fundamental rights and the legal frameworks will be depended on the behavior of state,” he said.
He also said, “The right path for us is to follow the CBDC-related development around the world and learn as much as possible. Especially, learning from the neighbours is important as they have the same ecologies.”
“Bangladesh will have to continue under the present ecosystem for next 10 years through increasing cashless transaction and I think we should strengthening our cashless society and increasing trust of users for 10 years,” he said
Muslim Chowdhury also said, “However, if our major international trade partners will come with the CBDC system instead of dollar then there will be no alternative to introduce the system. But until the situation, we should follow the present ecosystem and reducing our transaction costs.”
However, if the international trade partners opt for CBDC system, then Bangladesh will have to go to the system, he added.
Policy Research Institute Executive Director Dr Ahsan H Mansur said different countries are taking preparation over digital currency but there are matters of social dimensions and people’s privacy issues.
He also said that the introduction of digital currency will be very difficult in democratic countries where the political governments will not show interest to introduce the CBDC.
However, there are good sides of CBDC are that the tax revenue collection will be easy through the system, he said.
Ahsan said, “We should move fast to the cashless society and I think many objectives will be fulfilled through transformation of the classless transitions in the country.”
“We have to give more stress on the cashless transactions through MFS or mobile app for next five to seven years and our revenue collection will also increase and it will be transparent way.”
The interoperability and efficiency will have to increase. “If we can bring our all trade and commences related services through MFS or banking apps then we will come forward to the digital currency,” he said.
About introduction of the CBDC, he also said periodical reviews will have to be carried out to know what is happening to other countries.
Barrister Tanjib-ul Alam said Bangladesh having mobile financial service, and agent banking should be also among the early starters of the CBDC but there is need legal farm to introduce the digital currency.
Emerging Credit Rating Chairman Jamaluddin Ahmed in his keynote paper said the size of Bangladesh’s informal economy as a percentage of GDP is 32 per cent while it is less in the developed countries as payments and transactions have been digitised.
“Digitisation of transactions can ensure that the informal economy would become more organised. It can prevent money laundering too,” he said.
He said Bangladesh lost $50 billion to trade-related illicit money flow in six years between 2009 and 2015. Non-performing loans surged by Tk 31,000 crore to Tk 1,34,396 crore at the end of September 2022 from Tk 1,25,257 crore at the end of June the same year.
“Digital currency will save our money and transactions will be more efficient. Currently, 122 countries around the world are on the path to adopting digital currency policies,” he added.
