Majority of Central Banks exploring CBDCs: IMF

Majority of Central Banks exploring CBDCs: IMF

"Approximately 80-100 Central Banks worldwide, including G20 members, are exploring the Central Bank Digital Currency (CBDC) and are in various stages of piloting or testing," Tobias Adrian, Financial Counsellor and Director of the International Monetary Fund's Monetary and Capital Markets Department, said at the Global FinTech Fest. Over 26,000 delegates from 121 countries attended the three-day Fest, which concluded on 30 September. The Fest drew policymakers, technocrats, investors, entrepreneurs, economists, and bankers. The event was organised by the National Payments Council of India (NPCI) and the Internet and Mobile Association of India's Fintech Convergence Council (FCC) and Payments Council of India (PCI) (IAMAI).

"CBDCs are supposed to be extremely stable in terms of value, transaction costs, and customer confidence, in contrast to bitcoins, which vary in value and are more akin to an investment asset," Tobias Adrian explained.

Central banks worldwide are hurrying to consider CBDCs, as it is highly enticing for Central Banks to keep up with technology advancements. Additionally, there may be other developments in Central Bank-issued digital currencies, particularly in payment and lending networks.

"CBDCs may resemble, but not necessarily be, bitcoin assets; they may be built on blockchain technology and may be accessible through wallets. It is design-dependent, whether it is based on conventional payment systems or leverages extremely powerful blockchain technology "Tobias Adrian was referred to.

Meanwhile, he warned that CBDCs may face significant cybersecurity challenges. "You must ensure that the system is impervious to cyberattacks." It is not about technology alone, but about the nexus between technology and humanity. Second, CBDCs may undercut incumbent banks, necessitating the upgrading of banks' technology in order to compete. Finally, not everyone nowadays owns a mobile capable of trading CBDCs.

On the subject of costly cross-border payments, Adrian imagined that cross-border transfers would be significantly cheaper for modest amounts. There are some wallet exchanges that allow for the conversion of US dollars to rupee stable coins at a lower implicit charge. However, several negotiations are taking place between the Central Banks of various nations to reduce the cost of cross-border transfers.