WEF Report: 40 Central Banks Are Considering Digital Currencies, Blockchain Tech
A recent report by the WEF states that at least 40 central banks around the world are currently or soon will be experimenting with central bank digital currencies.
Citing a January 2019 report by the Bank for International Settlements (BIS), the WEF states that at least 40 central banks across globally are conducting research projects and pilots with blockchain technology that aim to address such issues as financial inclusion, payments efficiency and cybersecurity.
The report states that CBDCs, which are issued on distributed ledgers and can be transacted in a peer-to-peer manner, will purportedly enable faster and more cost-efficient transactions.
Among the most noteworthy benefits of CBDC, the report lists the potential to improve Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures procedures, reduce tax evasion, corruption and illicit activities, challenge commercial bank monopoly power of retail deposits, and potentially provide alternatives to private sector payments technologies. The report reads:
“Moreover, CBDC can potentially play an important role in a future where cash usage dramatically declines. If the use and availability of cash within a country becomes extremely low or non-existent, whether by policy or consumer preferences, then CBDC could potentially aid citizens.”
The report continues with a list of potential downsides of CBDCs, saying that banks should consider the challenges of blockchain technology, including transaction scalability, key management, transaction speeds, possible financial exclusion of populations who do not adopt CBDC — which could lead to further marginalization from digital payment systems — as well as risks to financial stability from bank disintermediation.
The WEF provides ten use cases for distributed ledger technology (DLT) аt central banks including the development of retail central bank currency, interbank securities settlement, bond issuance and lifecycle management, and cash money supply chain, among others.
In late March, Cointelegraph reported that general manager at the BIS Agustin Carstens advised against the issuance of CBDCs, claiming that a CBDC could facilitate a bank run, enabling people to move their funds from commercial banks to central bank accounts faster, thus destabilizing the system.