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A survey from a central bank-focused think tank found that fewer than one in five central banks are inclined to issue a central bank digital currency, compared to 38% in 2022.
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Nearly a third of central banks have delayed plans for a central bank digital currency (CBDC) due to regulatory concerns and changing economic conditions.
A survey of 34 central banks published on Feb. 11 by the think tank the Official Monetary and Financial Institutions Forum (OMFIF) and security tech firm Giesecke+Devrient Currency Technology found that those with plans to launch a CBDC are still going ahead with their plans, while about 31% have delayed implementing one.
Key reasons for the delays include “concerns with regulatory and governance frameworks” and unforeseen “economic challenges taking priority over CBDC work,” the report said.
“Establishing legislation is also partially dependent on political will, rather than the central bank’s technical capacity or decision on policy,” it added.
Around a third of surveyed central banks said they had delayed their CBDC timeline. Source: OMFIF
US President Donald Trump signed an executive order on Jan. 23 officially prohibiting the establishment, issuance, circulation and use of a CBDC in the country.
While the crypto community was mostly positive about the ban, industry executives expressed concerns about its effect on other countries exploring CBDC development.
Other reasons surveyed central banks cited for delaying the issuance of CBDCs included economic and, in one case, technical challenges.
“One respondent cited an inflation spike and debt distress’ behind the reason why the central bank has delayed its issuance timeline,” the report stated.
Other banks said they would reduce their CBDC research efforts to “focus on other payment issues.”
Related: 5 ways CBDCs could impact the global financial system
The OMFIF said technical challenges are no longer a serious obstacle for the vast majority of central banks; in previous surveys, technical features like offline payments, privacy and interoperability with existing payment systems were cited as barriers to a CBDC.
One bank cited technical challenges around user privacy as a reason for the delay, with the report noting that privacy is an “increasingly contentious issue due to the vast amounts of personal data being collected, stored and analyzed.”
The survey also found that the share of central banks responding that they were more inclined to issue a CBDC dropped to 18%, down from 38% in 2022.
This was mirrored by an increase in those banks less inclined to issue a CBDC, up 15%, compared to 0% in 2022. However, overall, most central banks surveyed expect to issue a CBDC.
Most central banks surveyed by the OMFIF still expect to release a CBDC in the next ten years. Source: Official Monetary and Financial Institutions Forum
The Human Rights Foundation, which unveiled a CBDC tracker in November 2023, says the benefits of CBDCs are the potential to improve payment efficiency and expand financial inclusion for populations with limited access to the financial system.
At the same time, drawbacks are listed as the currency’s potential to infringe on privacy and open up new avenues of government corruption, among other concerns.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
This article first appeared at Cointelegraph.com News
