The Lithuanian mint employee is seen holding a silver coin that was created for the purpose of exchanging it for sets of digital currency released by the Lithuanian central bank in Vilnius, Lithuania on June 1, 2020. (REUTERS/Andrius Sytas/File photo)
LONDON – In the most extensive survey conducted on central bank digital currencies (CBDCs) to date, it has been revealed that there is limited support and a lack of understanding regarding how a digital dollar, euro, yen, or pound would function. The survey, conducted by the CFA Institute, a global association for bankers, investors, and finance professionals, found that only 42 percent of the over 4,150 participants believed that CBDCs should be introduced. While countries like the Bahamas and Nigeria have already launched CBDCs, approximately 130 more countries, representing 98 percent of the global economy, are exploring the possibility of doing the same.
Olivier Fines, from the CFA Institute, shared with Reuters that even among their members, who are considered sophisticated and financially literate, there is a lack of understanding about CBDCs. He also noted that there is a general feeling of skepticism surrounding the potential benefits, especially in developed economies where individuals already have the ability to make instant online or mobile payments. Developed markets showed less support for CBDCs, with only 37 percent of respondents favoring their introduction, as opposed to 61 percent of respondents from emerging markets. The United States had the lowest support rate at 31 percent, followed by Canada at 38 percent, the European Union at 45 percent, and the United Kingdom at 46 percent. In China, where the People’s Bank of China is currently conducting the largest CBDC pilot project in the world, the support rate was 70 percent. India, which plans to launch an e-rupee next year, had a support rate of 66 percent.
Fines highlighted a significant divide, attributing it to the perception in developing economies that a CBDC could fill a gap that may not exist in developed countries. Even central banks, including the Bank of England headed by Andrew Bailey, have raised questions about CBDCs, stating that they may be a solution in search of a problem. Among UK respondents who opposed CBDCs, almost half cited a lack of a compelling need as the main reason. The biggest concern globally about CBDCs was the risk of cyberhacking, with 69 percent of respondents expressing worry. Data privacy also ranked as a major concern, with 64 percent of respondents in developed markets and 57 percent in developing economies emphasizing its importance. The level of support or opposition to CBDCs also correlated with age, with less than a quarter of respondents under 30 opposing them compared to 37 percent among those over 55.
Fines noted that while the younger generation is more receptive to CBDCs and crypto assets in general, it remains to be seen whether this acceptance will stabilize over time or if the mindset will shift as people age. Overall, the main question remains what benefits CBDCs will bring compared to existing payment systems. Fines stated that the argument for the necessity of CBDCs is still not settled.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
