The tantalizing prospect of Central Bank Digital Currencies (CBDCs) becoming a mainstream reality is seemingly edging closer according to recent research. A survey orchestrated by the Bank for International Settlements (BIS) released this July, accords that as many as 24 CBDCs could be operational across the globe by 2030.
The report uncovers that a striking 93% of central banks are engaging in comprehensive research relating to CBDCs. However, the paradoxical element is that a stolid 68% of these very banks claim they are unprepared to release their own digital currency “any time soon”. This perspective highlights an enigmatic, dichotomous state of affairs within the banking sector; cognizant of the potential digital future, yet barricaded by a sense of reticence or lack of readiness.
Unveiling the regional nuances, the foray into CBDC adoption is steered by the emerging market and developing economies (EMDE). As per the survey data, EMDE’s have a larger representation amongst banks piloting both retail (29%) and wholesale (16%) CBDCs, distancing the advanced economies (18% and 10% respectively).
While the shared motivation behind CBDC efforts in both developing and advanced regions include enhancing financial stability and cross-border payment efficiency, the EMDEs are driven strongly by a quest for financial inclusion. Conversely, the report points out that the unabating hurdles, such as CBDC cyberattacks, may be keeping the majority of banks from issuing retail CBDC’s in the near future.
At present, only four CBDCs are in circulation: The Bahamas, Eastern Caribbean, Jamaica, and Nigeria, with the next few years possibly ushering in an additional 15 retail and 9 wholesale CBDCs as per the survey predictions, a suggestion that while there are strides being made towards digital money, the journey remains laden with questions around readiness, security, and inclusivity.
There are no shortage of examples denoting progress; Last June, for instance, the Reserve Bank of India commenced discussions with numerous central banks regarding the prospect of cross-border payments utilizing its CBDC, the “digital rupee.”
This snapshot into the CBDC landscape certainly provides fuel for thought, and a firm base for further exploration into the challenges and opportunities that this nascent form of digital money brings to the traditional banking world. As the narratives surrounding CBDCs continue to evolve, it may undoubtedly usher in a transformative shift in the way we perceive and handle money in the digital age.
Source: Cointelegraph
