The world of blockchain and associated digital currencies is one synonymous with innovation and rapid progress, yet it inevitably faces a multitude of challenges as it strives to gain greater acceptance. One obvious threshold centres around Central Bank Digital Currency (CBDC). Many advocate that the development of CBDCs could stimulate financial inclusion. A Bank of Canada discussion paper, however, draws attention to the complexity of achieving this and the unfamiliar challenges central banks would confront.
Critically, the paper reveals three necessary types of inclusion for a universally reachable payment method; financial inclusion, digital inclusion, and practical accessibility. Considering private financial institutions may not be sufficiently incentivised to address underserved populations’ needs, the authors concluded that the actual number of individuals encountering barriers to these types of inclusion is considerably larger than previously estimated.
Take Canada’s First Nations as an example. Their distance from financial institutions is on average significantly greater than other Canadians, and consequently, their financial inclusion would hinge on digital accessibility. Similarly, First Nations youth might struggle with utilising digital technology effectively despite having access. Fear of technology due to security concerns might be an additional roadblock for other Canadians.
Also, we should not forget that cognitive load and other usability issues could potentially become more prominent barriers as the population ages. As per a cited survey, less than 60% of the population was rated as proficient or advanced in internet skills. Thus, the problem may lie in the service delivery and not in the nature of CBDC itself.
On top of that, disabled individuals are also likely to encounter substantial difficulties utilising this technology due to their comparatively limited internet access. The prevalence of these challenges indicates that to overcome these hurdles, central banks would be required to confront issues that would conventionally be regarded as out of their area of concern.
Hence, as the cryptocurrency community lobbies for universal financial inclusion through the adoption of CBDCs and other forms of blockchain-based transactions, it’s quite apparent that the road ahead is more multifaceted than it first appears. Policymakers, regulators, and innovators will need to consider these obstacles as they strive to make blockchain technology and CBDCs more broadly accessible, making sure not to leave the vulnerable behind.
Source: Cointelegraph
