One day soon, we’re going to get used to a new acronym: CBDC. It stands for “central bank digital currency” – and CBDCs could become the future of money and payments. Most of the world’s major central banks are either actively developing CBDCs or at least researching them.
China’s central bank is expected to announce a pilot central bank-issued digital currency in 2020. In India, meanwhile, a government economic panel has recommended that the Reserve Bank of India should adopt a digital currency. The South African, European, Canadian and Japanese central banks are all also exploring this concept.
Why are CBDCs being developed? Simply put, because they promise to serve a demand in payments that is currently not being met. Today, only one form of financial exchange meets the requirements of all users under almost all circumstances, and that is cash. That might seem like an odd thing to state when many of us are becoming increasingly habituated to paying by card or smart device.