Ripple survey finds most finance leaders see CBDCs disrupting fiat

The potential for central bank digital currencies (CBDCs) has generated an overwhelming consensus among financial institutions, according to the findings of a survey by Ripple Labs that obtained answers from 1,6000 respondents.

Ripple asked “1,600 finance leaders around the world” about CBDCs only to discovery that more than 70% of respondents surveyed across five global regions believe CBDCs stand to deliver major social change within the next five years, with Asia Pacific ranking the highest at 89%.

Four out of five regions see financial inclusion or greater access to credit as the largest potential breakthrough to be driven by CBDCs, the report stated, reminding that Ripple has been behind some of the real-world CBDC initiatives including Bhutan’s intention to deliver more efficient and cost-effective payments using a CBDC in order to meet its goal to increase financial inclusion to 85% by 2023.

CBDCs are believed to enable faster and more affordable payments as well as making loans and other financial services more accessible to historically underserved communities because of its ability easily to secure and repay loans, and build credit history.

Education, ID, offline, privacy, security are hurdles to CBDCs

“A government-backed digital currency could also facilitate easier distribution of funds for social welfare programs, as seen with stimulus efforts in the recent pandemic”, said the announcement, which admitted real-world limitations standing in the way of broad CBDC rollout and adoption.

“Consumer education, identity verification, offline access, and privacy and security protections are all hurdles to implementation. Alternatives and solutions exist for these challenges, but they must be solved at scale and in agreement between countries to ensure interoperability among currencies”.

According to a report by the Bank for International Settlements, nine out of 10 central banks are exploring CBDCs, which goes in line with Ripple’s findings that eighty-five percent (85%) of leaders at financial institutions think their country will launch a digital currency within the next four years.

Beyond financial inclusion, many respondents believe CBDCs will deliver enhanced national competitiveness (44%), greater efficiencies within their payment systems (43%), and advance innovation more broadly (42%).

In the meantime, the People’s Bank of China recently announced it would expand its pilot of the e-CNY to more cities, and Norway is testing its own prototype for a CBDC.