According to a 2021 Bank for International Settlements survey, 86% of the world’s central banks are actively researching the potential adoption of Central Bank Digital Currencies (CBDC); 60% were experimenting with the technology, and 14% were deploying pilot projects. The ECB appointed a dedicated task force in 2020 to conclude an investigation phase in October 2023. It will then decide whether to go ahead with the development phase.
Most central banks perceive their research on retail CBDC as highly strategic as it would enable universal access to central bank moneyA liability of a central bank, including banknotes in circulation and banks’ deposits with the central bank. More in a future dominated by digital and private forms of moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More. The research has focused on the technology underpinning a CBDC and economic and legal aspects.
Consumers, by contrast, seem mostly unaware of these debates. The Österreichische Nationalbank (OENB), the central bank of Austria, has just published survey results on 2,006 Austrian residents, 16 and older. The OENB survey asked respondents about their demand for a “digital euroThe name of the European single currency adopted by the European Council at the meeting held in Madrid on 15-16 December 1995. See ECU. More” in different use cases and their preferences towards crucial features of a retail CBDC, such as the access model (account vs. digital token), offline functionality, and person-to-person payments.
Respondents reported the perceived importance of attributes such as paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More security, privacy, and data protection. The survey stated explicitly that a digital euro would be a complementary offer to cashMoney in physical form such as banknotes and coins. More and that one digital euro would have the same value as one euro in cash.
Regarding the attributes of a CBDC, the respondents assign utmost importance to security and seem willing to compromise on privacy (assuming that physical cash will remain available). Many would opt for an account-based currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More over the more anonymous digital tokens.
Overall, the authors conclude “that it is far from certain that the introduction of a digital euro will unconditionally lead to a widespread adoption.” The authors add, “Central banks are advised to embrace a more user-centric design of CBDC, which must include communicating the key concepts and benefits to the potential users.” However, this may require central banks to reconsider their traditional principle of neutrality and freedom of choice concerning payment instruments.
The OENB survey results are similar to those from a Deutsche Bundesbank survey from June 2021. “According to the survey, 77% of all respondents had not heard or read about a digital euro before. 56% of all households interviewed were, in their initial assessment, skeptical about introducing a digital euro in the future,” said Bundesbank Board Member Johannes Beermann.
In the United States, public opinion is overwhelmingly against a digital dollarMonetary unit of the United States of America, and a number of other countries e.g. Australia, Canada and New Zealand. More, according to the Cato Institute, a libertarian think tank. The Federal Reserve released 2,052 public comments received before the end of May 2022. Most opinions were against the digital dollar (71%), and 21% were either neutral or unclear, compared with just over 12% in favor. According to the Cato Institute, the most ominous comments come from big finance, technology, and regulatory compliance companies, suggesting they are “interested in securing a government contract on the looming project.” The main banking lobbies are stridently opposed, with the American Banking Association (ABA) and Bank Policy Institute (BPI) saying, in the letter’s words, a digital dollar “could present serious risks to financial stability and may provide few if any, benefits.”
Contrary to popular belief, a U.S. CBDC is not necessary to “digitize the dollar,” as the dollar is largely digital today. However, the issuance of a CBDC would fundamentally rewire our banking and financial system by changing the relationship between citizens and the Federal Reserve. – American Bankers Association
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