According to PwC, more than 80% of central banks are considering establishing a CBDC


According to the organization, central bank digital currencies will significantly help cross-border commerce and economies.

Stablecoins provide many of the same advantages as CBDCs but without the government-issued currency’s supervision.

According to researchers at accounting company PwC, the great majority of central banks are contemplating creating a central bank digital currency (CBDC).

“CBDCs will enable the financial services sector to conduct cross-border payments more effectively, at a reduced cost, and 24 hours a day, 365 days a year,” PwC analysts said in the firm’s annual index of CBDCs and stablecoins, which was issued Monday. “We anticipate CBDCs to have a significant positive impact on cross-border transactions and economies in all relevant countries.”

The paper highlights that retail CBDC projects, which are digital currencies meant for public use, have matured more than wholesale CBDC projects, which are digital currencies utilised by financial institutions with central bank accounts. However, researchers noted that wholesale pilots had increased in recent years.

With the digital yuan, China became the first large economy to launch a retail CBDC in 2020. As of March 2022, the pilot is operating in 12 cities.

The Sand Dollar, which was issued as legal cash by the Bahamas Central Bank in October 2020, was the first retail venture of its sort. Shortly thereafter, Nigeria’s central bank established Africa’s first CBDC, the eNaira.

PwC rated the Hong Kong Monetary Authority and the Bank of Thailand’s joint effort to establish mBridge as the top wholesale product. Central banks are developing a proof-of-concept prototype for real-time cross-border foreign exchange transfers using distributed ledger technology.

Among the other notable initiatives are those undertaken by Canada, Singapore, France, and South Africa. “Through atomic delivery-versus-payment, wholesale CBDCs have the potential to improve security token post-trade activities and boost market efficiency across many asset classes,” Benoit Sureau, PwC France and Maghreb financial services risk and blockchain partner, stated.

PwC analysts included a stablecoin summary for the first time in their annual analysis on the CBDC index, adding that privately created tokens would continue to develop and coexist with CBDCs.

Stablecoins achieved a market valuation of over $190 billion in early 2022 and will continue to increase since the tokens provide many of the same advantages as a CBDC without the associated supervision, the paper added.

Transparency around reserve assets, especially stablecoins backed by fiat money, will be a big worry moving ahead, experts noted, as the asset class grows and regulation tightens.

“The stablecoin’s function in the crypto markets has evolved and will continue to grow as crypto use expands, necessitating a more prominent role for stablecoins throughout the broader financial ecosystem,” Matt Blumenfeld, director and digital asset expert at PwC, said. “Regulation will only bolster the significance and legitimacy of the role stablecoins will play.”

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