CBDC: Time for Action with 15 Launches by 2030
Central banks making steady progress on CBDCs
Kudos to G+D and the OMFIF for analyzing the progress of CBDCs and finding that most are making steady progress despite delays at some central banks.
The survey of 34 central banks found that 48% expect to launch a CBDC in the next 3-5 years. This means that by 2030, there should be around 15 active CBDCs.
As to delays, less than a third of the banks surveyed have delayed their issuance timeline. The primary causes of delay are regulatory issues and the exploration of solutions.
These delays do not mean that banks are rethinking CBDCs, as 67% of central banks surveyed see no change in how they think of CBDCs. That said, there is a slight uptick from 10 to 15% of central banks who are less inclined to issue a CBDC this year than last.
Is this the “time for action?” While the message from both the OMFIF and G+D that central banks should get on with it and start issuing CBDCs may sound self-serving, they are correct.
The industry has solved the technical issues associated with CBDC issuance, including offline transfers. All that remains is getting them into people's hands. Further delay will only hinder the innovation surrounding CBDCs and deprive citizens of CBDC’s benefits.
Central banks' primary concern is that they issue CBDCs and have low adoption rates. The CBDC launches in Nigeria and the Bahamas exemplify this problem.
Will low adoption be a problem? No one can say for sure, but central banks have learned from Nigeria and the Bahamas that just tossing a CBDC out on the market doesn’t work.
I expect future CBDC launches to be highly coordinated and successful affairs.
👉TAKEAWAYS
🔹75% of central bank survey respondents expect to issue a CBDC. Where 34% expect to issue one in 3-5 years, 91% have done or will conduct feasibility studies.
🔹50% of developed market central banks are pursuing a CBDC to preserve monetary sovereignty
🔹48% of respondents expect to issue a CBDC in five years, up from 32% in 2023
🔹31% said that they have delayed their issuance timeline
🔹20% report improved satisfaction with offline payments functionality, up from 0% in 2023
🔹27% identified user experience as the most challenging feature of a CBDC, up from 10% in 2023
🔹CBDCs offer greater depth than IPS by serving as a platform for innovation and addressing a broader spectrum of use cases.
🔹Offline CBDC capabilities offer resilient alternatives during network disruptions, ensuring continuity and cash-like privacy.
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