A recent study led by the financial titan, Citi, has shed light on a shift in the financial landscape. Strikingly, it revealed that a large portion of financial institutions are gravitating towards integrating Central Bank Digital Currencies (CBDCs) into their systems to foster a quicker global payment process.
This compelling approbation for CBDCs was elucidated in Citi’s latest edition of the Securities Services Evolution. Holding the magnifying glass over 12 financial market infrastructures (FMIs), the bank sounded out the thoughts of 483 participants, with an overwhelming 87% expressing favour for CBDCs as a means to expedite transaction settlements. This perhaps comes in line with India’s growth towards T+1 settlement technology, a concept that ensures all institutional trades are settled within a 24-hour timeframe.
But while the survey amplified a 21% global support jump for CBDCs, Owing to multiple test-runs and the increasing adoption of blockchain and cryptocurrencies, some hurdles supposedly remained unscaled. Notably, the role that these digital currencies play in cross border payment systems and the uncertain regulations that hound them.
While financial giants like Citi bank seem sold on the perks of digital assets, disputes have arisen surrounding these currencies. Some institutions and investors maintain a level of apprehension borne out of a prevalent void in the regulatory landscape. Lamentably, the absence of a globally harmonised framework acceptable across multiple jurisdictions has been flagged by 51% of participants as the greatest inhibitor to the growth of digital assets.
Moreover, a sample of traditional investors bearing witness to damaging lawsuits against crypto firms have turned wary. The deception and scams clouding the crypto space along with the restrictive knowledge of certain demographics only compound these fears.
To further the complexity of the situation, as much as 29% accentuated the lack of interoperability among networks as a barrier to the rise of fast global payments backed by digital currencies. On the contrary, a recent Bernstein report advocates for the potential of stablecoins and CBDCs, suggesting a nearly $3 trillion market capitalization by 2028.
In conclusion, Citi’s report leaves us grappling with the dichotomy in the digital financial landscape. While CBDCs and blockchain technology promise a more efficient future, hindrances in their implementation persist. As we look to the coming years, only time will tell if the underlying uncertainties can be resolved, and if these innovative technologies truly have the momentum to influence and reform the financial industry.
Source: Cryptonews
