Central Bank Digital Currencies Expected to Become Operational by 41% of Central Banks by 2028
In a recent study carried out by the Official Monetary and Financial Institutions Forum (OMFIF), it was revealed that approximately 41% of central banks anticipate they will have a working central bank digital currency (CBDC) by 2028. Surprisingly, about 30% of those who responded in the study shared that their openness towards issuing a digital currency has seen an increase over the past year.
Near Two-Fifth of Central Banks Not Considering CBDC Implementation
The OMFIF study indicated that there are some dissenting voices in this trend. Around 17% of central banks participating in the study stated definitively that they have no plans to introduce a CBDC. At the same time, nearly 70% indicated their intent to implement an operational CBDC within the next ten years.
The increased openness towards CBDCs, demonstrating a noticeable positive sentiment, is also worthy of highlight. Around 30% of respondents stated that they are more likely now to issue a digital currency than they were a year ago. According to the report from the study, this change in stance could be the result of central banks seeing positive results from their feasibility studies and exploratory work.
Challenges Faced in CBDC Adoption
A concerning issue evident from the study was the divide in reasons for each central bank wanting to issue CBDCs. As per the report provided by OMFIF:
Financial inclusion is the primary driving force for a majority of emerging market respondents. On the other hand, for several developed market central banks, it’s more about preserving monetary sovereignty defensively.
On another note, only about 1 out of every 5 respondents considered the proficiency of payment systems as their motivation to implement CBDCs.
Looking at the responses, it seems about 68% of developed market’s central banks identify low adoption rates for CBDCs as a major concern. They also perceive potential bank disintermediation as their second biggest concern. Meanwhile, for respondents from emerging markets, only about 37% said that low CBDC adoption was their main concern. A similar number of central banks mentioned cybersecurity as their main concern.
As the prevalence of active CBDCs gets wider, several sectors in the private arena see areas such as Know-your-customer (KYC) capacity, payment processing, and wallet provisioning as vital sectors for collaboration. Another interesting finding was the increasing popularity of the concept of CBDC networks operating cross-border.
How Immediate Connect App Can Facilitate this CBDC Evolution
The evolving landscape of digital currencies poses many challenges, but this is where technologies like the Immediate Connect app come into play. This advanced application can provide seamless transactions using CBDCs while ensuring maximum security. With its advanced features, Immediate Connect stands a good chance of addressing pain points such as the low adoption and cybersecurity concerns expressed by central banks.
Overall, the future looks bright for CBDCs, and innovation plays a key role in this development. As more central banks begin to see the potential benefits and solutions like Immediate Connect continue to advance, we can anticipate a future where digital currencies are the norm.
Frequently asked Questions
1. What does CBDC stand for?
Answer: CBDC stands for Central Bank Digital Currency.
2. What does it mean for central banks to run operational CBDCs?
Answer: Central banks running operational CBDCs means that they are planning to introduce their own digital currencies and have the infrastructure and systems in place to operate them effectively.
3. How was the data collected for this study?
Answer: The data for this study was collected through surveys and interviews conducted among central banks worldwide to assess their plans regarding the implementation of CBDCs.
4. What percentage of central banks are planning to run operational CBDCs by 2028?
Answer: According to the study, 41% of central banks have revealed their intentions to run operational CBDCs by the year 2028.
5. What are the potential benefits of central banks implementing CBDCs?
Answer: Implementing CBDCs can offer various benefits such as improved payment efficiency, enhanced financial inclusion, better monetary policy transmission, reduced risks associated with cash usage, and increased transparency in financial transactions.
6. Are there any challenges or risks associated with implementing CBDCs?
Answer: Yes, there are challenges and risks associated with implementing CBDCs. Some of these include technological infrastructure requirements, cybersecurity concerns, potential impact on commercial banks and monetary policy, and ensuring user privacy and data protection.
7. What are the main factors driving central banks to consider CBDC implementation?
Answer: The main factors driving central banks to consider CBDC implementation include the growing popularity of cryptocurrencies, the need to modernize payment systems, the demand for faster and more secure digital transactions, and the desire to maintain central banks’ control over monetary policy and financial stability.