CBDCs may be more integrated with the life of an average consumer in the future. However, infrastructure adoption and risk and cost management are a challenge.
According to a report titled “The Future of Payments 2022”, published by the UK-based Finextra Research, digital assets like the Central Bank Digital Currency (CBDCs) and stablecoin could co-exist with the legal tender in the future, but their “trajectory and impact” cannot be known immediately.
Ville Sointu, former head of emerging technologies at Danish bank Nordea, said, “It’s the publicly stated goal of central banks to make sure potential future digital currencies they issue are seamlessly compatible with the existing commercial money system.”
However, the crashing of TerraClassicUSD (USTC) and the subsequent instability created by the sharp drop in the price of other digital assets might make investors and other stakeholders tread cautiously when dealing with digital currencies, the report noted.
The crash of the Terra (LUNA) token and its algorithmic stablecoin hit the headlines in May this year. Click here to read more about it and what events led to the crash.
US-based IT solutions company IBM’s Associate Partner, Payments, Mary Ann Francis, said that the CBDC process took years to develop, but its associated risks and consequences are yet to be fully determined or defined.
“The rise in CDBC demonstrates the strides made in adoption by central banks, but this process has taken years, and the consequences are yet to be fully determined. Like any or many new payments efforts, regulators and participants are cautiously engaging and evolving their practices as needed since the associated risks or impacts are yet to be fully defined,” added Francis.