According to a new report by Ripple (XRP), financial leaders see central bank digital currencies (CBDC) as the future of fiat money. The Ripple report noted that CBDCs have a greater impact to drive economic and social changes globally over the next five years, with benefits such as financial inclusion and access to credit.
The survey of 1,600 people from different countries showed that the Asia Pacific region is the leader in CBDC popularity. In the region, China's central bank maintains its lead after recently announcing its plans to expand the CBDC pilot project to more cities. 70% of respondents see CBDCs as the money of the future.
In particular, 85% of executives at financial institutions are confident that many of their countries will announce CBDCs within the next four years. In addition to increasing financial inclusion, survey respondents believe that the digital currency will make countries more competitive, improve payment systems and advance financial innovation.
Although the report highlights the extraordinary benefits of making CBDCs available, central banks still face challenges such as financial education, authentication, offline access, privacy and security protections. The following statements were included in the report:
"Ultimately, there is consensus on the potential of CBDCs to bring more inclusive financial systems. There is still a lot of work to be done for CBDCs to be fully effective in the system. However, many countries have pushed the button and we may see a domino effect soon."
However, many countries are focusing on global collaboration to increase interoperability between CBDC projects. The U.S. Treasury Department recommended managing global CBDCs to improve cooperation between countries. Recently, many governments have targeted cryptocurrencies due to bankruptcies and high volatility.
Therefore, interest in CBDCs is increasing. The findings of the report are important in this process. With the continued decline in cryptocurrencies, some countries feel that the introduction of CBDCs will mitigate risks. The United Nations (UN), in its report published yesterday, recommended banning Bitcoin (BTC) advertisements in developing countries.