The World Economic Forum (WEF) revealed that dozens of central banks around the world are either researching or experimenting with central bank digital currencies (CBDCs).
In the Bank for International Settlements (BIS) last January report, WEF noted that at least 40 banks across the world are researching the blockchain technology for issuing financial inclusion, payments efficiency, and cybersecurity.
Also based on WEF report, CBDCs can be conducted in peer-to-peer and also enable faster and more cost-efficient transactions.
Besides the CBDCs, WEF listed out the Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures, which is potential not only for reducing tax evasion, preventing corruption and illegal activities, challenge commercial bank power in retail deposits, but also supplying private payments technologies.
“Moreover, CBDC can potentially play an important role in a future where cash usage dramatically declines. If the use and availability of cash within a country becomes extremely low or non-existent, whether by policy or consumer preferences, then CBDC could potentially aid citizens”, WEF noted.
Furthermore, the reported pointed out some disadvantages of CBDC and the challenges of blockchain technology such as transaction scalability, key management, transaction speeds, financial exclusion without CBDC and financial stability risks.
WEF also gave 10 examples for distributed ledger technology (DLT) аt central banks such as retail currency development, interbank securities settlement, bond issuance, lifecycle management, and cash money supply chain.
However, in late March, Agustin Carstens – BIS general manager, claimed that CBDC could create a bank run by moving user funds to central banks account faster, which made the system destabilize.