CBDCs: Hype vs. Reality
The global push for central bank digital currencies (CBDCs) is facing a reality check. While the United States has opted out of the race, other nations are forging ahead, but the results so far are less than spectacular. According to Olga Goncharova, CEO of consulting firm Rizz Go and a former Binance executive, CBDCs haven’t lived up to the hype.
“CBDCs were envisioned as a revolutionary technological advancement, but they currently appear to be costly imitations of traditional fiat currencies, which citizens and businesses already utilize through online banking and payment apps,” Goncharova stated at the Blockchain Forum in Moscow.
Slow Adoption and Uncertain Future
Despite years of development, mass adoption of retail CBDCs remains elusive. Even China, a pioneer in the CBDC space with its digital yuan, is facing challenges. While the digital yuan is widely promoted by the Chinese government, its penetration into the payment system remains limited, according to Goncharova.
“The expectations surrounding CBDCs have been overestimated,” she asserts. “None of the jurisdictions worldwide have achieved widespread adoption of retail CBDCs.”
Motivations and Obstacles
The motivations behind pursuing CBDCs vary. The European Union is pushing for a digital euro to bolster its financial autonomy and reduce reliance on payment giants like Visa and Mastercard. However, challenges abound, including concerns from banks about market share and difficulties in adoption. Even the technology itself is a point of debate, with the European Central Bank unsure if the digital euro will operate on a blockchain due to perceived risks and lack of compelling use cases.
Russia, another active participant in the global CBDC race, has also encountered delays in launching its digital ruble. While the government initially envisioned widespread adoption, it has been pushed back due to uncertainties and ongoing testing.
“In Russia, there’s no pressing need to decrease reliance on foreign payment systems, unlike the EU,” Goncharova explained. “The digital ruble is primarily viewed as a tool for enhancing the efficiency of domestic settlements. Its further development will depend on clearly defined goals and tangible benefits for users and the economy.”
The future of CBDCs remains unclear. While some see them as the future of finance, others remain skeptical about their practicality and impact. As Goncharova suggests, the true success of CBDCs will hinge on their ability to deliver real value to users and address the needs of the modern economy.
