New research from the independent think tank OMFIF and German firm Giesecke+Devrient Currency Technology showed that 31 per cent of surveyed central banks have delayed the rollout of their digital currencies, partly due to concerns over regulatory and governance frameworks.
The research further showed that while as many as 67 per cent of central banks have not changed their thinking on CBDCs in the last year, the share of those who are inclined to issue a digital currency has declined steadily.
Namely, only 18 per cent said they are more inclined to issue a CBDC than the previous year, compared to 38 per cent in 2022, while the proportion of those less inclined than last year rose to 15 per cent from zero in 2022.
The research coincides with Donald Trump’s move in the US to ban local authorities from creating a digital dollar, with the newly minted President arguing it threatens the stability of the financial system, individual privacy, and the sovereignty of the United States.
Citing clear hesitancy around the subject, the OMFIF and Giesecke+Devrient Currency Technology warned that it could delay important innovation.
“CBDCs enable private sector innovation and serve as the basis for various new products and services,” said the CEO of the German firm, Wolfram Seidemann.
“In fact, the success of CBDCs will depend on a thriving ecosystem and close collaboration between the public and private sectors.”
Nevertheless, three-quarters of central bank survey respondents anticipate issuing a CBDC, with 34 per cent aiming for a timeline of three to five years. Moreover, the research showed that central banks pursuing retail CBDCs are more likely to delay their issuance timelines over those pursing wholesale CBDCs.
This is evident in Australia where the Reserve Bank announced in September it intends to prioritise work on a wholesale CBDC over a retail one, viewing it as an evolution than a revolution in monetary policy.
At the time, assistant governor Brad Jones said the central bank had assessed the benefits to the economy as more promising and the challenges less problematic for a wholesale CBDC compared to a retail version.
“In jurisdictions that have issued a retail CBDC or indicated that it is quite possible in coming years, the main motivations have less resonance in Australia,” he said.
However, according to Seidemann, retail CBDCs “present a promising solution to the major challenges the financial system is currently facing” by fostering “a more inclusive, resilient and accessible financial system”.
Ultimately, the OMFIF and Giesecke+Devrient Currency Technology view central banks as institutions responsible for not only regulating financial systems but for facilitating innovation, striking a balance between maintaining financial stability and monetary policy mandates while embracing new technologies.
