World Economic Forum Study Reveals 98% of Central Banks Are Eyeing CBDCs
The World Economic Forum (WEF) recently released a report investigating wholesale central bank digital currencies (wCBDCs). The document explored ongoing initiatives, potential use cases in financial markets, and the potential of wCBDCs to alleviate significant industry challenges and address key pain points.
It revealed that more than 98% of central banks worldwide are conducting research, pilot programs, or implementation of CBDCs to enhance the functionality of and broaden access to central bank money (CeBM).
“CeBM is ideal for systemically important transactions despite the emergence of alternative payment instruments,” the report states. “Wholesale central bank digital currency (wCBDC) is a form of CeBM that could unlock new economic models and integration points that are not possible today.”
The report states that CeBM is a particularly suitable choice for interbank payments and securities transactions due to several key characteristics. Firstly, CeBM eliminates credit and liquidity risks, aligning with the recommendations of the Principles for Financial Market Infrastructures (PFMI) for critical transactions. This reduces the possibility of financial instability stemming from these areas.
Secondly, CeBM facilitates final settlement of transactions. Backed by a robust legal framework, it guarantees the irreversible transfer of assets, fostering confidence and stability within the financial system.
Finally, CeBM promotes financial stability by acting as a virtually risk-free instrument. It complements existing credit creation processes without introducing additional risks, ensuring a healthy financial ecosystem.
The report identified eight longstanding challenges within the industry, with four specifically highlighted
