- 1 IMF Managing Director Kristalina Georgieva set the tone for the November CBDC campaign, emphasizing the need to accelerate CBDC development.
- 2 About 68 countries and two currency unions are actively researching CBDCs.
Many influential organizations around the world, including the International Monetary Fund (IMF), the Bretton Woods Committee, and the Bank for International Settlements (BIS), were seen to urge governments to pursue digital currencies. Global policymakers continue to champion the development of central bank digital currencies (CBDCs) despite growing concerns and notable failures associated with their implementation.
However, critics argue that rather than persisting with this endeavor, policymakers should redirect their focus toward more fundamental financial reforms that could foster a freer financial system.
IMF Managing Director Kristalina Georgieva set the tone for the November CBDC campaign, emphasizing the need to accelerate CBDC development. Bill Dudley, Chair of the Bretton Woods Committee, not only called for the United States to embrace CBDC development but also advocated for the BIS to establish an international standard for CBDCs.
Cecilia Skingsley, Head of BIS Innovation Hub, defended CBDCs from being labeled a “solution in search of a problem,” suggesting their potential usefulness in the future.
This push for CBDCs comes amid a peculiar landscape. The Human Rights Foundation’s CBDC Tracker reveals that nine countries and the Eastern Caribbean Currency Union’s eight islands have launched CBDCs, while 38 countries and Hong Kong are engaged in CBDC pilot programs.
Additionally, 68 countries and two currency unions are actively researching CBDCs. Despite this proliferation, none of these CBDC projects has proven to be particularly successful.
Examples from The Bahamas, China, and Jamaica highlight the challenges. In these regions, CBDCs have struggled to gain adoption despite incentive programs, including giveaways, discounts, and loyalty points. In China, where millions were given away, a former research director from the People’s Bank of China acknowledged suboptimal results with low and highly inactive usage.
The situation in Thailand adds further skepticism. Plans to distribute 10,000 baht ($288) to citizens through a CBDC were delayed due to funding uncertainties, causing concerns about the initiative’s legality. Other regions faced more severe consequences, such as Nigeria, where CBDC struggles led to cash shortages, protests, and riots in the streets.
Critics argue that the CBDC experience, at best, represents government waste and, at worst, entails excessive government control. Against this backdrop, it remains perplexing why international organizations like the IMF, the Bretton Woods Committee, and the BIS persist in urging policymakers to forge ahead with CBDCs. As skepticism grows and real-world challenges surface, calls for a reevaluation of this digital currency pursuit become more prominent.
Ripple VP Advocates CBDCs for Financial Inclusion
Central bank digital currencies (CBDCs) are hailed as solutions for financial challenges, aiming to ease cross-border payments and enhance financial inclusion. Ripple’s Vice President, James Wallis, shared these views in a recent video on Ripple’s YouTube channel.
Wallis explained how CBDCs can foster global financial inclusion, emphasizing the barriers faced by the low-income class. He highlighted the difficulties they encounter in accessing basic financial services due to a lack of banking relations and credit history.
Wallis identified commercial banks’ reluctance in regions with low-income demographics, driven by revenue concerns. This financial inclusion issue spans the globe, impacting various countries. As CBDCs gain prominence, Wallis sees them as a means to bridge financial gaps, providing access to essential services for marginalized economic groups.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.