Central Banks Preparing for CBDC Launch
More than 98% of the worldโs central banks are in the process of researching, experimenting, piloting, or deploying central bank digital currencies (CBDCs), according to the World Economic Forum (WEF). The organization predicts that by 2030, there could be 24 live CBDCs available for transactions.
Benefits of Wholesale CBDCs
The WEF highlights the importance of wholesale CBDCs (wCBDCs) for addressing industry challenges related to interbank payments and securities transactions. These benefits include:
- Reduced credit and liquidity risk
- Settlement finality
- Promotion of financial stability
Advantages of Wholesale CBDCs
The organization emphasizes that wCBDCs could unlock new economic models and integration points that are currently not possible. Some advantages of wCBDCs include:
- Preserving the role of Central Bank Money (CeBM) as a credit risk-free payment instrument
- Providing a foundational layer for digital payments in the next generation of financial markets
Improving Cross-Border Transactions
The WEF suggests that wCBDCs have the potential to enhance cross-border transactions. However, the organization notes that legal and regulatory frameworks necessary for widespread wCBDC adoption may take time to develop.
Hot Take: Central Banks Embracing Digital Currencies
As central banks around the world gear up to launch CBDCs, the financial industry is entering a new phase characterized by digital currency adoption and innovation. The shift towards CBDCs reflects a growing recognition of the benefits and opportunities presented by digital assets in the modern financial landscape.
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