According to a report by the World Economic Forum (WEF), over 98% of central banks worldwide are currently engaged in some form of research, experimentation, piloting, or deployment of central bank digital currencies (CBDCs). The WEF predicts that by 2030, there could be as many as 24 live CBDCs in operation.
The WEF highlights the potential benefits of wholesale CBDCs (wCBDCs), which are primarily used for large-scale transactions between financial institutions. It suggests that wCBDCs could help address challenges related to interbank payments and securities transactions within the banking industry.
The report emphasizes that central bank money (CeBM) is crucial for interbank payments and securities transactions due to its minimal credit and liquidity risk. It enables institutions to achieve settlement finality and promotes financial stability. Despite the emergence of alternative payment instruments, CeBM remains ideal for systemically important transactions.
wCBDCs, a form of CeBM, have the potential to unlock new economic models and integration points that are currently not feasible. They offer the advantage of maintaining the credit risk-free nature of CeBM as a payment instrument, providing a foundational layer for digital payments in the future financial markets.
The WEF also believes that wCBDCs can enhance cross-border transactions. However, the organization acknowledges that the legal and regulatory frameworks necessary to facilitate widespread adoption of wCBDCs have an unknown timeline.
In conclusion, the WEF’s report highlights the significant progress made by central banks in exploring CBDCs. It underscores the potential of wCBDCs to address industry challenges and improve cross-border transactions. However, the adoption of wCBDCs on a large scale depends on the development of appropriate legal and regulatory frameworks.
