Ripple’s most recent conversation with Professor Darrell Duffie, the Adams Distinguished Professor of Management and Professor of Finance at Stanford Graduate School of Business Governments, focused on the over 100 countries that are actively looking into CBDC projects.
CBDCs are a global phenomenon. There are now more than one hundred countries representing over 95 per cent of the world’s GDP exploring a CBDC, all at different stages of development.
says the professor.
Duffie explained that the US is lagging behind other countries in developing a Central Bank Digital Currency (CBDC) due to a lack of government regulations, while China is the furthest ahead in terms of development but has seen limited usage of its digital yuan due to privacy concerns.
He noted that other countries have also introduced CBDCs, but have seen limited adoption due to a lack of Internet access and education about digital wallets. Some countries like Brazil have successfully implemented new digital payment systems, while others like India, Singapore, Hong Kong and the eurozone are testing or piloting CBDCs.
About the main drivers of adoption and exploration of CBDCs, Daffie says that each country is exploring CBDCs for various reasons, such as ensuring a digital national currency in case of paper money becomes obsolete, cost savings, advanced payment systems and financial inclusion.
He also added that, in this early stage of development, every central bank has some amount of FOMO—or fear of missing out.
Still, many central bankers remain unsure of the ultimate use case for or utility of the technology and are moving slowly so as not to disrupt their commercial banks. Despite this uncertainty, I expect most countries to continue working on CBDC development. In particular, many European countries are moving quickly towards a digital euro. Russia is also working on a CBDC, perhaps highly motivated by backstopping its access to international payment systems.
The professor also stated that attitudes toward CBDC and stablecoin development differ depending on the agency and branch of the US government. In terms of wider adoption, he stated that consumer education campaigns would not suffice. The government and the Fed should work together to overcome these challenges and increase competition and innovation in payment systems.
“Countries are learning that it’s not simply a case of “if you build it, they will come.” Thoughtful consumer education, upgraded infrastructure and meaningful incentives are needed to accelerate adoption. ” Duffie noted.