Currently, the central banks of many countries are not in favor of printing currency anymore. Denmark is one such country which is heading towards vir
Currently, the central banks of many countries are not in favor of printing currency anymore. Denmark is one such country which is heading towards virtual currency, E-Krone. Introduction of a virtual currency will substantially reduce crimes. In Europe, Sweden and Britain are also planning to go virtual. Some countries like Canada and Singapore have even tried out the blockchain based system for digital payments.
As per the Governor of Denmark, Lars Rohde, heading towards virtual currency will help to reduce the transaction fees. However, there are certain disadvantages as well. Since it hasn’t been tried out before, it can harm the economy if things doesn’t go as per plan. Cash is not much used in Denmark. Only around 20 percent of the total transactions are done in cash. Hence, if the electronic system fails, then cash cannot be considered as a second option.
Although Denmark is looking for better and cheaper alternatives to cash, some amount of cash will still remain in the economy. According to them, the cost will drastically reduce if more transaction are made via debit or credit cards. From 2017 onward, the Central bank of Denmark will outsource the cash production function to other continues. Finland has been given the responsibility to mint coins. However, it hasn’t yet been decided who will print the notes.
According to Rohde, they are also planning whether the virtual currency will be anonymous or not. The blockchain technology is best suited to countries planning to introduce virtual currency. However, in the blockchain model, all the transactions will be recorded. Every currency transacted will have a serial number, which can be traced back anytime. Hence, there has to be a high degree of trust between the citizens of the country and the government. It is most suited to those countries which are very developed and transparent.