As far as digital money is concerned, central bank digital currency (CBDC) seems to be the answer to it for upcoming years. Data provided by Atlantic Council, an international affair-based think tank, has found that around 44 nations are going through the pilot phase for CBDC projects, with 19 belonging to Africa and others from Asia, Central America, and South America. For 2024, market experts believe that CBDC-based developments will continue to happen, on account of more central banks entering the landscape. “According to me, CBDCs’ allow us to democratise finance, giving the unbanked buying power and introducing them to newer financial tools and methods of payments. While we are still early on in 2024, our aim with digital money should be education, since most people seemingly do not still understand it and are hesitant to use it. Our initial aim should is to empower the people with the right knowledge and use cases for them to adopt digital money correctly,” Avinash Shekhar, co-founder and CEO, Pi42, a crypto-Indian National Rupee (INR) futures exchange, told FE TransformX.
From what it’s understood, in 2024, central banks are expected to be more inclined towards CBDC-based developments over increased blockchain investments. Going by market research, CBDCs have the potential to impact the global financial payment landscape, along with bringing out the full potential of decentralised finance (DeFi). Signs suggest that in 2024, countries such as India, Singapore, Brazil, South Korea, among others, will be targeting full-scale CBDC deployment. For example, during the Singapore FinTech Festival 2023, Ravi Menon, former managing director, the Monetary Authority of Singapore, mentioned that the country will go for a test run of the live issuance of wholesale CBDCs in 2024, to ensure backing for its commercial banks’ payment mechanisms. While the Reserve Bank of India (RBI) introduced its retail CBDC version, called E-Rupee, which reportedly clocked 10 lakh transactions daily in December 2023, it remains to be seen when the central bank comes up with the wholesale CBDC edition. Reportedly, in 2024, South Korea will unveil its pilot CBDC in Q4, which is expected to comprise 100,000 individuals, and will be handled by the Financial Services Commission (FSC), Financial Supervisory Service (FSS), and Bank of Korea (BOK), along with Brazil, which named its CBDC as Digital Real Electronic X (DREX).
“I believe several countries are expected to join the CBDC scenario in 2024, driven by motivations such as economic modernisation, technological innovations, and the desire to maintain monetary sovereignty. Potential entrants could include major economies such as India, Brazil, and South Korea, as well as smaller nations seeking to leverage CBDCs for developmental purposes. In 2024, digital banking platforms could integrate CBDCs to provide customers with cost-effective payment solutions, cross-border transactions, and financial management tools,” Sathvik Vishwanath, co-founder and CEO, Unocoin, a cryptocurrency exchange, explained.
According to Statista, a data and business intelligence platform, the value of CBDC-backed transactions is anticipated to clock a 260,000% growth for the period 2023-30. Insights provided by Juniper Research, a research, forecasting and consulting firm, mentioned that the total amount of payments through CBDCs will clock $213 billion by 2030. The firm also stated that by 2030, 92% of the total CBDC transactional value will happen at a domestic level. In accordance with data provided by the Official Monetary and Financial Institutions Forum (OMFIF), an independent think tank organisation, for CBDCs to be able to tap into their complete potential, it’s imperative for central banks to have partnerships within the private sector, especially with regard to financial technology (fintech) companies. Media reports have shown that upcoming RBI CBDC projects could include startup-based partnerships, which could help with the reduction of related technological drawbacks. “As CBDCs become more prevalent, we may witness increased collaboration between central banks, regulatory bodies, and technology providers to establish interoperability standards and ensure the security and resilience of digital payment systems. Additionally, the emergence of CBDCs may prompt discussions around privacy, data protection, and the role of central banks in the digital economy. Overall, CBDCs have the potential to reshape the global financial landscape, but their success will depend on effective collaboration, regulatory clarity, and public trust,” Sumit Ghosh, co-founder and CEO, Chingari, a Web3.0 live streaming application, concluded.
