Adoption and potential of central bank digital currencies, study

Tuesday 18 February 2020 10:23 CET | News

Central banks in established countries appear to be taking a cautious stance on the transition from fiat currencies to central bank digital currency (CBDC), Cointelegraph reported.

On the other hand, banks in emerging market economies (EMEs) are moving more rapidly toward issuing government sponsored CBDCs. The findings have been revealed by a recent survey published by the Bank of International Settlements on CBDC adoption.

According to the study, an estimated 1.6 billion people could have access to CBDCs in the next three years. Respondents of the survey included 66 banks representing 75% of the world’s population and 90% of its economic output. Thus, 10 % of the banks reported that they would issue the first general-purpose CBDCs in the next three years, representing 20% of the world’s population.

Asian Times presented some consequences of rolling out CBDCs such as:

  • Developers to build tools that will allow for seamless exchange between CBDCs and cryptocurrencies;
  • As most of the CBDCs will be issued in emerging market economies, payment inefficiencies and lack of financial inclusion could be reduced;
  • Also, by increasing the blockchain technology use, industries will need to adapt to support these currencies for everyday purchases, not only trading;
  • Disease control - reported that the People’s Bank of China has ordered commercial banks to take used notes out of circulation and disinfect them.

The disinfected fiat cash will also need to be kept in quarantine for a period of seven to 14 days before it can be reintroduced to the public, with the length of time bills are kept in isolation varying from region to region according to its level of infection with the virus, according to Asia Times.

Moreover, the Guangzhou branch of the People’s Bank of China claimed on February 15, 2020, that all used cash notes coming from hospitals, wet markets, and public transportation buses will simply be annihilated as soon as possible. And according to reports from the area, stacks of cash are now being stockpiled in warehouses until they can be eliminated.

Overall, digital currencies have the potential to achieve an almost immediate mass adoption that the creators of cryptocurrencies and stablecoins have been working toward for the past 10 years, Asian Times concluded.

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Keywords: central bank digital currency, CBDC, digital currencies, cryptocurrencies, stablecoins, China, banks, Central banks
Categories: DeFi & Crypto & Web3
Countries: World
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