Twenty-three major central banks participated in a thorough investigation into the evolution and requirements of digital currency, including fungibility, convertibility and availability. They also discussed the ready-to-use digital currency issuance calendar for central banks and revealed their greatest concerns about their implementation.
Read also: China ranks 35 cryptographic projects as President Xi pushes Blockchain
The first CBDC: when and where
OMFIF, the official forum for monetary and financial institutions, is an independent think tank on the central bank, focusing on economic and monetary policy, asset management and financial supervision and regulation. . The organization released this week a 36-page report on the digital currencies of the central retail bank, commissioned by IBM. Entitled "Retail CBDC: The Next Payment Frontier", the report includes a "thorough investigation of the heads of 23 central banks in advanced and emerging economies," explained OMFIF.
The central bank survey, conducted between July and September, "predicts that the first CBDC will be produced within five years in a small economy and will serve a specific political purpose with a well-defined usage. OMFIF added that a number of central banks around the world are seriously considering creating and creating a ready-to-use CBDC, which will likely require some form of public-private partnership. The report elaborates:
We will probably see the introduction of a central bank – that is, a fiat money – of retail digital money over the next five years, in addition to or in replacement of banknotes and coins.
With regard to the country that will be the first to issue a digital currency from the central bank, OMFIF stated that "It is unlikely that the first such issue will come from a G20 central bank; it is much more likely to be launched in a smaller and less complex economy in response to a specific policy objective and use case. "
A number of G20 countries are studying how they can issue CBDCs, some of them being closer to doing that than others. Some believe that China will be the first country to issue one since the director of the PBOC's Digital Currency Research Institute said in August that it was "almost ready". However, PBOC Governor Yi Gang said in September that there was no timetable for its publication. deployment, emphasizing the need for further research. In addition, a cryptography bill was recently adopted in China after President Xi Jinping's bullish speech on blockchain technology.
23 central banks talk about CBDCs
OMFIF surveyed 13 central banks of advanced economies and 10 of emerging markets. Of the respondents, 69% said "providing an alternative to cash and other means of payment" was their primary motivation for exploring the development of a digital currency at the central bank. 62% believe that the CBDCs could improve cross-border payments, which are still cumbersome, expensive and slow, unlike national retail payments that have become fast and efficient. The details of the report:
CBDCs should be available offline and work wherever money is currently used, with 73% of respondents requiring CBDCs to be available in all circumstances. More than 20% prefer decentralized systems to improve resilience.
Of the central banks surveyed, 69% "identified CBDCs' ability to build confidence among monetary authorities and the financial system," the report said, noting that they did not explicitly address private sector digital competitors.
Respondents also felt that "CBDCs must be fully fungible and convertible to and from fiat money to resolve friction in end-to-end payment and remittance networks" and should "have a disaster recovery plan, especially in countries where the frequency of power outages or network connection problems related to weather conditions ".
At the same time, 29% are worried about the potential impact of CBDC implementation on financial stability, nearly 45% suggesting that "there would be a risk of reducing the currency of commercial banks and functions in the monetary system ". However, 83% felt that their role would not change significantly. The report further reveals:
82% said the greatest concern for financial stability triggered by implementation by the CBDCs was the risk that the management of digital banks would occur at a higher speed than before.
In addition, 50% of those surveyed "expressed their concern about the possibility that a significant change is occurring in the market structure and the profile of stakeholders," stressing that "this could result in the use widespread use of decentralized and private digital currencies instead 64% of respondents said that outsourcing "intermediation" functions, such as client integration, would be important for the implementation of CBDCs. "FOMP also noted that on the basis of the survey results, it "does not consider private digital communications, currencies are gaining popularity or are well accepted in a universal context, even if closed private networks may exist". which they operate. "
Do you think central banks should issue digital currencies? Do you think China will be the first to publish one? Let us know in the comments section below.
Images courtesy of Shutterstock and OMFIF.
Did you know that you can buy and sell BCH privately using our local non-depository Bitcoin Cash trading platform? The local market.Bitcoin.com has thousands of participants from around the world who are currently trading BCH. And if you need a Bitcoin wallet to store your coins securely, you can download one here.