CBDCs – Central Banks losing heart?

The havoc to crypto payrolls caused by Binance’s decision to stop supporting the BUSD token shows how quickly a decision by one actor can upset an entire ecosystem.

As Central Banks globally trumpet their intention to introduce Central Bank Digital Currencies (CBDCs), it’s appropriate to question how well they really understand what they are getting into.

A late 2023 progress report from the European Central Bank (ECB) may not fill industry observers with confidence, since it laid out plans to go from the current phase – which is highly conceptual – to testing and full consumer roll-out by 2030 – just six years away.

While other central banks have been more pragmatic, legitimate questions remain over their plans from both technical and feasibility perspectives.

Central banks have, by and large, already enlisted the aid of technology companies and commercial banks in their CBDC design journeys, but they now say payment service providers (PSPs) are set to take on a much more prominent role.

A new survey from the Digital Money Institute (DMI), sponsored by Ripple, has found that only 45% of central banks are currently working with payment service providers, but over 80% say they intend to.

Given that four in 10 central banks say they expect their CBDC to be up and running by 2028, the numbers currently working with PSPs seem very low.

Currently, just 7% of central banks have launched a CBDC – and apart from the digital Yuan, these are very minor currencies.

A further 7% say they will launch in the next two years, with 40% saying they will launch within five years.

Of greater interest, however, is the fact that the number of those saying they will not be launching any kind of CBDC, which has doubled from 10% in 2021 (via a separate survey) to 20% today.

In part, this rise in those saying no can be attributed to the difficulties inherent in creating CBDCs – but it also speaks to how obscure the benefits of CBDCs are.

Big problems, unclear benefits

By consensus, central banks surveyed by the DMI agree that including off-line payments would be a major challenge for any CBDC – as would integrating national payment systems into a wider international or global system in terms of connectivity and interoperability.

At the same time, the DMI’s study shows they remain uncertain of the benefits CBDCs could bring to their economies.

38% of central banks – all from emerging economies – cite “financial inclusion” as a motivator for CBDCs, while just under one in five (17%) say they want to decrease the role of the US Dollar in cross-border trade through CBDCs.

The casual observer will be forgiven for thinking that these motivations sound somewhat vague when stacked against clear objectives such as reducing the cost of payments or making payment faster, simpler and easier.

Furthermore, the case for globally tradeable CBDCs gets weaker as major national faster payment systems become integrated with each other, such as Thailand’s PromptPay and India’s UPI.


Despite the fantasies of conspiracy theorists everywhere, PCM has long been sceptical about the widespread roll-out of CBDCs over the next decade.

Our scepticism is driven not just by the challenges – those evinced in our article above, and others – but also by the low-level benefits CBDCs offer compared to (for example) fully-functioning instant payments coupled with workable digital ID.

The most recent statement by the Bank of England on a digital pound noted their intention to roll out for trading purposes initially, which seems a sensible choice.

Trading environments require speed and security, but more importantly are closed to all but those institutions licensed to trade, meaning that issues such as energy use, computing power, integration with existing POS systems and more do not come into play.


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