Central bank digital currencies (CBDCs) are facing challenges in adoption, even in countries where they have been officially launched.
A GlobalData survey highlights that many consumers are reluctant to transition from traditional payment methods due to a lack of incentives, privacy issues, and technological difficulties. This perception of limited value is a key factor in the slow uptake of these government-backed digital currencies.
Blandina Szalay, a banking and payments analyst at GlobalData, attributes the limited adoption of CBDCs in countries like the Bahamas, Jamaica, the Eastern Caribbean Currency Union, and Nigeria to the absence of compelling incentives for consumers to transition from traditional payment methods.
Convenience and habit play significant roles in people’s payment choices. GlobalData reports that CBDCs haven’t yet offered enough benefits to make them a preferred option. Users in regions with active CBDC programs have expressed frustration, citing the new systems as more complicated without providing substantial advantages.
For central banks, the challenge extends beyond technical issues. Szalay emphasizes that widespread adoption is crucial for CBDCs to deliver their intended benefits, such as enhancing cross-border payment efficiency, fostering financial inclusion, and promoting economic and monetary stability.
Meanwhile, a September 2024 report from the Atlantic Council revealed that 134 countries, covering 98% of the global economy, are exploring CBDCs. Over 65 nations, including India, Australia, and Brazil, are in the advanced stages of piloting or launching digital currency projects. All G20 countries are investigating their CBDCs, with 19 in advanced stages of exploration.
A recent Bank for International Settlements (BIS) report highlights a significant trend: central banks are more likely to issue wholesale CBDCs than retail versions. The survey, conducted between October 2023 and January 2024 among 86 central banks, revealed that over 94% are considering digital currencies. While retail CBDCs focus on features such as holding limits, offline options, and interoperability, wholesale CBDCs prioritize interoperability and programmability.
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