A new report by the International Monetary Fund (IMF) has predicted that Central Bank Digital Currencies (CBDC) could become a reality soon. The report was based on a survey conducted by IMF and the World Bank among financial institutions in different countries.
According to the analysis, about 20% of the respondents are considering the possibility of issuing such currencies. However, the work is in the early stages with only four pilot projects reported. Uruguay has reportedly launched a CBDC pilot program already whereas China, Sweden, Ukraine, the Bahamas and the Eastern Caribbean Currency Union are on the verge of starting a program.
CBDC is finding favour with institutions because of “lowering costs, increasing efficiency of monetary policy implementation, countering competition from cryptocurrencies, ensuring contestability of the payment market, and offering a risk-free payment instrument to the public.”