Outdated Controls and New Realities

The Bank of Lithuania has put its finger on a common issue: central banks often find their ‘parental controls’ on crypto assets are more akin to worn-out parental advice than relevant regulations. The persistent rapid evolution of digital assets cannot be ignored, and pretending that these developments don’t exist is akin to those awkward parents who still try to ground their teenagers from technology.

A Hands-On Approach

Marius Jurgilas, a board member of the Bank of Lithuania, advocates for central banks to dive into the digital asset pool rather than merely spectate from the sidelines. He likened this passive stance to being an anxious parent watching their kids use outdated safety gear. The wise move, according to Jurgilas, is to engage directly, understand potential risks, and build competency in a controlled environment—not unlike a driving school for crypto assets.

Why Getting Involved Matters

• To Keep Pace: As digital assets evolve, central banks must evolve too, using forward-thinking technologies to stay competitive.
• Security: Exploring new avenues allows for safer financial systems that can better fend off global tech threats.
• Innovative Development: Involvement is crucial for public service innovations that promote meaningful advancements in the financial landscape.

Building The Future with Blockchain

The Bank of Lithuania has recognized that the future of Central Bank Digital Currencies (CBDCs) is intricately tied to blockchain technology. They haven’t just acknowledged this; they’re actively participating. The bank is in the process of developing LBChain, its very own blockchain, aiming to pave the way for reliable and regulated digital asset research, innovation, and acceptance.

Collaboration and Competition

In a bid to bring this vision into reality, the central bank has teamed up with big players like IBM and Tieto to create the platform. They’re not just sitting back letting the tech companies do the heavy lifting; they want to be part of the innovation narrative!

Experimenting with Digital Assets

To put their theories into practice, the Bank of Lithuania plans to issue a blockchain-based collector coin, aptly named LBCOIN, to provide a controlled experiment. This isn’t merely for decoration—it’s set to help them delve into the practical implications of digital assets before fully diving into the larger CBDC discussion.

What to Expect

Come spring 2020, they will release 24,000 tokens, which will serve as an intriguing test bed for multiple aspects of digital currency operation and regulation.

Global Central Banking Trends

The interest surrounding CBDCs has surged dramatically in the wake of private sector ambitions like Facebook’s Libra. The international banking community, spearheaded by entities such as the Bank for International Settlements, is becoming more receptive to the notion of integrating digital currencies into existing systems. A shift in attitudes means central banks can no longer afford to remain passive observers.

Looking Ahead

• Increased Support: As countries like China take bold steps in testing CBDCs, the pressure on other nations to catch up is greater than ever.
• Collaborative Innovations: Partnerships between governments and blockchain startups could redefine the financial landscape sooner than anticipated.