In a bid to stay relevant in the midst of an ever-changing ecosystem, governments have been adopting lucrative technologies to their financial infrastructures to stay ahead. And who would have thought that the crypto industry would later become a source of inspiration after the first digital asset was launched in 2009? That’s what CBDCs are all about – although they are government-backed, they take advantage of crypto’s distributed ledger technology.
As someone who has been engaged in the crypto industry for a while now or you are just intending to join, you can agree that being acquainted with such trends is very important. Why? For the simple reason that things can change rapidly in this sector. That’s why following the Ethereum price prediction 2030 by different experts can help ensure you make more informed decisions. And for those wondering whether CBDCs will be the new form of money in the next years, this article is just right for you.
Do statistics mean anything?
Although CBDCs are still in their infancy, the trajectory over the next few years seems encouraging. According to Juniper Research, the value of payments via these digital tokens might reach $213 billion per year by 20230 if more countries continue to welcome them. As of December last year, there were about 150 projects either at launch, testing or research stage. Of this, countries that accounted for 98% of the global GDP were already exploring options for digital tokens.
As per the time of the research, countries like China had already conducted over 200 scenarios. In fact, during the first trial, the People’s Bank of China distributed about ten million digital yuan to Shenzhen citizens. Other countries like the US are still not decided about pursuing the token even after releasing a framework for the launch. However the Federal Reserve has shown that it is open to hear from various voices on these subject.
In the UK, things haven’t been so different. After the Bank of England announced its interest in digital tokens in 2023, it rolled out a Consultation Response to collect the views of the public on the same. Well, despite the fact that over 50,000 responses were received this year, it’s still yet to be clear what direction the bank might take. UK might need to collaborate with other bodies like the BIS Innovation Hub, which has run several projects, including Project Aurum. Project Aurum is basically about using tech to improve the privacy of CBDCs.
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The pressing need for global financial inclusion
Discussions about financial inclusion continue to increase as the world seeks to become sustainable. In fact, according to a recent World Bank report, financial inclusion can help achieve seven of the 17 sustainable development goals. Who does not agree? Being able to access financial services greatly affects our daily lives and helps us plan for almost everything—from life goals to unexpected emergencies.
Although there still remain some challenges here and there, we cannot ignore the progress we have made towards becoming financially inclusive. According to Finclusion, the number of adults possessing official financial accounts has actually increased by about 50% within the past decade alone. And surprisingly, this is about the same percentage (50%) reduction in terms of global extreme poverty rates over the same duration. Some experts believe that, according to these statistics, financial inclusion is one of the many effective ways of eradicating extreme poverty.
Well, you may be wondering how CBDCs can contribute to these efforts to ensure a financially inclusive society. A recent UN report revealed that a good number of individuals and small firms had limited access to banking services while others lacked because of the high costs involved. In fact, 18% of the world’s population remains unbanked. CBDCs can come in handy in such situations by reducing transaction costs, eliminating lending barriers and so on. When used well, these tokens can help excluded businesses access financing and expand their market reach.
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Are there any challenges?
Implementing CBDCs is, however, not without challenges. Marginalized communities are often less informed and might need robust educational efforts to get them on board. Plus, the question of cybersecurity is not one that you can ignore, especially now that cyberattacks are on a rampage. You can imagine what it means for such an industry, especially after more than 343 million individuals experienced attacks just last year.
As if that is not enough, other regions like North Carolina have resisted the CBDC tide after issuing a new law to ban the operations of the currency in the state. Further, the law restricts the Federal Reserve from carrying out any pilot tests of the token in the region. That’s not all. Finland and Ecuador dropped the use of CBDCs after they proved that they did not work for their economies. Do you think such moves can give other nations the impression that CBDCs do not work and maybe hinder their implementation?
Final thoughts
Well, as you can see, digital currencies are still a heated discussion across different divides. And the reason why most governments are turning to CBDCS is because they believe they might help attain financial inclusiveness. With more countries opening up to this technology, who knows? Maybe digital tokens will become the future of money.
