A new report by Giesecke+Devrient and the Official Monetary and Financial Institutions Forum [OMFIF] reveals that it’s time for the decisive step to deploy central bank digital currencies.
The payments services industry is experiencing a period of dynamic change. New entrants from beyond the banking sector are rapidly developing products and services that enable faster and more convenient payments. While this private innovation is valuable, the evolution of public currency is crucial to maintain its relevance in the digital age.
‘CBDCs: It’s time for action’ offers a comprehensive analysis of the state of CBDC development, identifies the barriers to implementation of CBDCs and highlights the potential benefits that could result from swift deployment.
OMFIF’s survey of 34 central banks provides reason for optimism. Over the past year, valuable progress has been made on many of the technical challenges related to CBDC development. Central banks have reported increased satisfaction with their progress on previously challenging issues such as offline payments, privacy, and interoperability. The focus of central banks is now shifting from feasibility to implementation challenges, with much more attention going towards developing user experience.
‘It’s time to make the decisive step to create a public digital payment ecosystem with CBDC,’ says Wolfram Seidemann, chief executive officer of G+D Currency Technology. ‘
‘’CBDCs hold significant potential for advancing the digital economy. By offering a public infrastructure, central banks can pave the way for innovative financial products and services, while reducing fragmentation in the financial system,’’ he added.
Key findings
‘CBDCs can foster a more inclusive, resilient and accessible financial system,’ Wolfram Seidemann, chief executive officer, Giesecke+Devrient Currency Technology.
Cautious optimism: 75% of central banks surveyed plan to issue a CBDC, with over half allocating more internal resources, despite delays in timelines for one-third of respondents.
Split motivations: Financial inclusion and preserving central bank monetary sovereignty are the leading motivations for emerging market and developed market central banks, respectively.
Purpose driven design:Central banks are shifting focus from exploration of the reality of CBDCs to targeted designs that address financial inclusion, efficiency and policy alignment.
Role as a trust anchor: CBDCs can serve as a digital monetary anchor, fostering competition and innovation across payment systems while safeguarding privacy through regulatory oversight.
Breakthroughs in technical challenges: Central banks have made significant progress in addressing technical requirements for CBDC issuance, with offline payments no longer an insurmountable obstacle.
