Central Banks Are Still Interested In CBDCs Despite Rising Concerns

Central banks around the world have been exploring central bank digital currencies (CBDCs). However, in recent years when many central banks have expressed interest in launching these government-backed digital currencies, concerns have mounted over the privacy of these coins. Nevertheless, central banks appear to be unwavering, with a recent survey showing that CBDCs are still underway.

Central banks remain interested in CBDCs

A recent survey by the Bank for International Settlements (BIS) conducted on 86 central banks noted that the majority of them are still exploring CBDCs. Over half of these financial institutions are also conducting solid experiments in developing a pilot phase for this project.

The survey further showed that 15 retail and nine wholesale CBDCs will already be available in the economy by 2030. The responses further demonstrate that a significant number of central banks were participating in some form of CBDC project.

The number of central banks currently working on developing CBDCs has increased from 90% in 2022 to 93% in 2023. The survey results also demonstrate that the work being done on retail CBDCs is far more advanced than what has been done on wholesale CBDCs.

The paper has further said that the majority of central banks saw potential value in having retail CBDC and a rapidly-growing payment industry. Much interest in CBDCs has also been seen in emerging economies, with such development being seen as a way of bringing more people into the banking industry.

However, some banks are showing hesitancy in integrating CBDCs because of the recent turmoil that has been seen across the cryptocurrency industry. A number of central banks have said that they are less likely to issue a CBDC soon because of such developments.

The survey has also shown that, to date, stablecoins and other cryptocurrency assets are rarely being used to make payments outside the cryptocurrency industry. The result shows that these digital currencies have yet to find a footing in the traditional financial industry.

Privacy concerns around CBDCs

While CBDCs have piqued the interest of many central banks globally, their adoption has remained significantly low. The dropping trend has been attributed to the dangers of government abuse that threaten to outweigh the potential benefits that are posed by CBDC, according to reports at Consensus 2023.

The majority of the participants that participated in the discussions said that governments were not trusted to build digital money without using the funds to conduct surveillance on the citizens. The majority of the participants that participated in the discussions noted that there were concerns across the broader audience regarding the use of CBDCs by governments.

169 people attended the conference and answered an electronic survey during the three-day conference in April. Only 9% of them answered that it was not possible to design and create a surveillance-free digital currency that was backed by the government. 39% of these participants agreed that there were concerns that governments would allow digital currencies to work with a privacy guarantee.