BAKU, Azerbaijan, September 12. Most of the world’s central banks are exploring or developing digital currencies, Trend reports via the report of International Monetary Fund (IMF) on ‘The Ascent of CBDCs [Central Bank Digital Currencies]’.
According to the report, the CBDC research and development have significantly grown in the past few years, with 15 pilots ongoing across the world and 15 more in an advanced research stage.
“As of July 2022, there were nearly 100 CBDCs in research or development stages and two fully launched: the eNaira in Nigeria - in October 2021, and the Bahamian sand dollar - October 2020. Central banks all over the world are now exploring their potential benefits, including how they improve the efficiency and safety of payment systems,” the report said.
Besides, according to the report, beyond promoting financial inclusion, CBDCs can make domestic payment systems more resilient and foster competition, which may lead to better access to money, increase payment efficiency, and lower transaction costs.
“CBDCs can improve transparency in money flows and could help reduce currency substitution. While a CBDC may have many potential benefits on paper, central banks must first determine if there is a compelling case to adopt them, including if there will be sufficient demand. Some have decided there is not such demand, at least for now,” the report noted.
“Issuing the digital currencies comes with risks that central banks need to consider. Users might withdraw too much money from banks all at once to purchase CBDCs, which could trigger a crisis. Central banks will also need to weigh their capacity to manage risks posed by cyberattacks, while also ensuring data privacy and financial integrity,” added the report.