As 2023 unfolds, the future of digital currencies backed by central banks is accelerating. According to a new report from Juniper Research, the global value of central bank digital currencies (CBDCs) will grow dramatically from $100 million today to $213 billion by 2030. Why is this high growth in CBDC adoption and use expected? Quite simply because CBDCs offer reliable sources of digital currency backed by central banks for consumers, businesses and governments.
Although there are ongoing debates around digital currency privacy and fear of government overreach, the regulation and adoption of CBDCs and stablecoins continues to accelerate.
Since the COVID-19 pandemic, the world is increasingly digital. The past 18 months have seen many citizens using mobile phones and digital wallets to carry out financial transactions. Blockchain-based CBDC solutions allow for integration with mobile apps, enabling greater financial inclusion for citizens, while simultaneously eliminating third-party banking fees. Current developments demonstrate that many of the world’s largest central banks are moving forward with plans to pilot and launch their own digital currencies to complement existing fiat currencies.
Examples of Key Central Banks Planning CBDC Initiatives:
- In Brazil the Central Bank is readying plans to launch a CBDC in 2024.
- The Central Bank of Montenegro recently announced a pilot project for a CBDC with Ripple.
- The Bank of England seems to be moving forward with work on a Digital Pound as evidenced by job postings with CBDC related titles posted on the bank’s website. In a recent speech by Sir Jon Cunliffe, he noted that “The Bank of England is well advanced in the build and implementation of a new central bank real time payment system (RTGS), the central rail of the current UK payments infrastructure.”
- The Digital Currency Monetary Authority has announced the Universal Monetary Unit (UMU)—a digital coin—designed to accelerate cross-border transactions.
- The EU Parliament recently endorsed the first EU rules to trace crypto-asset transfers, prevent money laundering, as well as common rules on supervision and consumer protection. The new rules provide a uniform legal framework for crypto-assets markets in the EU.
The Future of Money is Digital
These facts demonstrate that the time is now for the advent of digital currencies backed by central banks. Because CBDCs can be managed, monitored, controlled and redeemed as needed by central banks, the implementation of these digital assets merits pilots and testing to establish trust and reliability.
Ripple’s CBDC solutions offer a comprehensive platform for minting, managing, transacting, and redeeming CBDCs that meets the high security standards of central banks. Ripple is currently engaged in CBDC and stablecoin pilots with the Republic of Palau, the Central Bank of Montenegro and the Royal Monetary Authority of Bhutan.
With strong technology in place for central banks to launch their own CBDC it’s expected that in 2023 there will be greater adoption of digital currencies. The transformation from fiat to digital currencies offers the promise of lower costs for basic financial services, increased security, accelerated payments and reduced energy consumption. When you consider these factors, as well as the audit trail that blockchain provides for tracking and tracing transactions, it’s easy to see why CBDCs are moving from vision to reality.
Learn more about how CBDCs are powering the next evolution of finance.
