CBDCs and Their Impact on Finance

Central bank digital currencies (CBDCs) are becoming a focal point in global finance, with various countries at different stages of development. In fact, 4 monetary authorities – the Bahamas, Eastern Caribbean, Jamaica and Nigeria – have already launched a CBDC; 37 more are currently running CBDC pilots; and another 70 are in development/research phases. It should be noted that some major banks (e.g. Bank of England, European Central Bank) are taking a more cautious approach. As CBDCs continue to push toward a more prominent place, they are likely to serve as competition for cryptocurrencies and also change countries’ monetary sovereignty. CBDCs are also likely to challenge traditional payment systems and foster greater financial inclusion.