Report states that over 100 countries are actively exploring central bank digital currencies
A new report has revealed that central bank digital currencies (CBDCs) are gaining popularity, with 109 countries actively exploring or engaging with them at various stages of development. The report, compiled by Finbold, states that 45 countries are involved in research, 32 are in the development phase, and 21 are in the pilot stage. 11 countries have already launched their CBDC projects, while two have canceled their involvement. The number of countries in advanced exploration phases reached its highest level in June, with 64 countries, a 28% increase from May 2021. CBDCs are seen as a response to the challenge posed by cryptocurrencies and stablecoins to national currencies. They provide a stable means of exchanging digital assets and potentially reduce the risks associated with using cryptocurrency. Blockchain technology is a key component of CBDCs, providing secure communications and creating an open ledger to record transactions. A report by Citi Global Perspectives and Solutions suggests that up to $5 trillion could move to digital money formats such as CBDCs by 2030, with about half linked to blockchain technology. Governments are positioning CBDCs to improve the efficiency and safety of retail and large-value payment systems and to accelerate the shift to a cashless society. However, there are concerns about the threat to privacy and operational challenges. Some of the challenges include infrastructure development, ensuring interoperability, and managing the transition from cash to digital currency. CBDCs could also impact traditional monetary policy tools and reduce central banks’ control over the money supply. Additionally, there is a risk of exacerbating technological inequalities, as access to the necessary digital infrastructure is not evenly distributed. The report also mentions the International Monetary Fund’s plans to create a global platform for CBDC implementation, although it warns that poorly designed CBDCs could pose considerable risks to the financial system and economies.
About The Author
