While central banks across the globe have begun researching the possibility of introducing a central bank digital currency (CBDC), only three countries have officially launched one, and we still await one from a genuine world leader – aside from China piloting the digital Yuan with questionable levels of adoption.
Instead of getting closer to any CBDCs launching anywhere in the world, we are seemingly getting further away – thanks to a plethora of delays and pauses put on CBDC projects.
In a new report released by securitytech company Giesecke+Devrient (G+D) and the independent think tank OMFIF, almost a third of central banks have been forced to delay their issuance timeline, while the proportion of central banks that say they are less inclined to issue a CBDC than last year has risen to 15 per cent from zero in 2022.
In light of these findings, G+D and OMFIF are urging central banks to take the next step and deploy CBDCs. They say that if they don’t, they risk delaying important innovations.
“It’s time to make the decisive step to create a public digital payment ecosystem with CBDC,” explains Dr Wolfram Seidemann, CEO of G+D currency technology. “CBDCs hold significant potential for advancing the digital economy. By offering a public infrastructure, central banks can pave the way for innovative financial products and services, while reducing fragmentation in the financial system.”
However, as it stands, central banks don’t seem to be adopting this same attitude, posing the question: Will any more countries take the CBDC plunge? To find out if most plans are doomed to be put on ice, we reached out to industry experts.
Are crypto payments the future?
Can Taner, chief product officer at crypto payment gateway Bitpace, breaks down the economic and political conditions affecting the decision of central banks.
“While CBDCs have been a growing focus for central banks, commensurate with the rise in popularity of crypto, and the explosion in value of Bitcoin, their adoption could be stalling. China has set a precedent with its establishment of the digital yuan, but other countries will potentially be slow to follow suit, owing largely to shifting political context. The US administration has been vocal in its anti-CBDC policy, with Trump’s recent crypto-focused executive order ‘prohibiting the establishment, issuance, circulation, and use of a CBDC‘.
“While Trump has been more critical of a so-called ‘digital dollar’, there have been pushes to create a ‘digital euro’ that could help standardise the crypto industry, providing ‘easier and cheaper alternative to the currently fragmented payments landscape in which merchants work‘. With different attitudes emerging regionally, it could be the case that while some central banks like those in America are more reticent to issue a CBDC, we will see promotion of the idea in regions like the EU.
“It’s true that some enthusiasm has cooled, with many central banks shifting from aggressive promotion to a more measured ‘wait-and-see’ approach. However, the appeal of cryptocurrency as a normalised payment method is increasing substantially. Democratising digital payments and making them as easy as a tap on your screen can open up huge possibilities for free-flowing trade, owing to a more financially secure, reliable and inclusive economy.”
Contrasting attitudes
“Central bank digital currency (CBDC) exploration is becoming increasingly fragmented across the globe,” adds Martin Hargreaves, chief product officer at Quant, a distributed ledger technology service provider that improves connections and communications between blockchains.
“Currently, the UK is well-positioned to launch a CBDC. Bank of England Governor Andrew Bailey recently noted a ‘strong need’ to modernise payment practices, especially for cross-border transfers, adding that ‘we must continue to prepare for retail CBDC’. The newly elected Labour government also seems more enthusiastic than its Conservative predecessor; under its financial services plan, it has committed to continued work on creating a digital pound.
“In contrast, the US sits at the opposite end of the spectrum. President-elect Trump has been a vocal opponent of CBDC and has supported the CBDC Anti-Surveillance Act, which prevents the Fed from issuing a CBDC without congressional approval. Having vowed to make the US the ‘crypto capital of the world’, his election victory means that, at least for the duration of his term, we can rule out the prospect of a digital dollar.
“The EU finds itself somewhere in the middle. While the European Central Bank (ECB) has pushed ahead with work on creating a digital euro, it faces the challenge of securing buy-in from its member states, many of whom are less enthusiastic about the project than the ECB and European Commission.
“CBDC development will therefore be gradual and inconsistent, with different jurisdictions moving at different paces.”
Situational differences
Lorien Carter, market research analyst at Juniper Research, explains why developing and developed countries can have varying views on CBDCs.
“As global research into retail CBDCs progresses, countries are diverging in their approach. A clear pattern is emerging: while developing nations are moving forward with retail CBDC development, many developed countries are beginning to put their projects on pause.
“Emerging economies are motivated by the need to promote financial inclusion and address digital divides, whereas the vast majority of consumers within developed economies already have reliable payment systems. While a retail CBDC is still useful for promoting resilience and choice within developed economies, central banks in developed countries are likely to prioritise wholesale CBDCs over retail CBDCs in the short term.
“Norway, Sweden, Canada, Australia, and most recently, the US, have all announced a pause or ban on issuing a retail CBDC. This is not surprising, as most developed countries are already well served by their existing retail payment infrastructure.
“Most developed countries already have instant payment systems or access to other low-cost digital payment networks, which renders a retail CBDC relatively unnecessary from a consumer perspective. However, as cash levels continue to decline and cryptocurrency use grows, it is likely that central banks in developed countries will eventually turn to retail CBDCs to preserve the role of central bank money in the long term.”
Is it over for CBDCs before it even began?
According to Simon McLoughlin, CEO at Uphold, the infrastructure provider for on-chain payments, banking and investments, CBDCs days are numbered.
“While CBDCs promise the convenience of digital payments coupled with centralized control, they raise concerns about privacy, transactional surveillance and government overreach. They are in effect government controlled, programmable and trackable money with the ability to include or exclude individuals from global financial systems at the click of a mouse – Big Brother money!
“CBDCs also ignore, with Bitcoin at least, one of the cryptocurrency’s main strengths, namely a finite supply; whereas with CBDCs there is no limit to the amount that central banks can issue – giving them the ability to print digital money with the negative effects that incurs such as the devaluation of savings and upward inflationary pressure.
“Stablecoins on the other hand offer significant upsides compared to CBDCs – they operate on a decentralized ledger and are already gaining mainstream acceptance. Over 95 per cent of the stablecoin market consists of USD-pegged stablecoins like USDC, and BUSD. Going forward they will undoubtedly have a growing role in the global economy, initially as an instrument for things like cross-border payments but in the medium to long-term as a more efficient alternative to day-to-day commerce. 2025 may well be the year that we simply refer to stablecoins as money.”
US-influence
“In recent days, the Federal Reserve has made its stance on CBDCs increasingly clear,” explains Ronen Cojocaru, CEO of 8081.io. “Chairman Jerome Powell stated unequivocally that the Fed will not introduce a CBDC during his tenure, which lasts until May 2026. This comment came during a Senate Banking Committee hearing, where Powell confirmed that launching a digital dollar is not on the central bank’s agenda under his leadership.
“His remarks reflect broader scepticism within the Fed about whether a CBDC is necessary, especially considering the efficiency of existing electronic payment systems and concerns about potential risks to financial privacy.
“Further reinforcing this cautious approach, Federal Reserve Governor Christopher Waller has argued that innovation in the payments sector should be driven by the private sector rather than the government. Speaking at the Clearing House Annual Conference 2024, Waller questioned the rationale for government-led digital currency initiatives, suggesting that without clear market failures, there is little justification for such intervention. He reiterated his doubts about the benefits of a CBDC, pointing instead to stablecoins, privately issued digital currencies tied to stable assets, as a more viable alternative. While acknowledging the potential of these digital assets, he stressed the need for proper regulatory oversight to manage associated risks.
“Policymakers appear to be leaning toward allowing private sector innovations to shape the future of digital payments, with regulatory frameworks ensuring financial stability and consumer protection.”
