Central Bank Digital Currencies (CBDCs) and private sector cryptocurrencies are predicted to have the biggest disruptive impact over the next 20 years
Central Bank Digital Currencies (CBDCs) and private sector cryptocurrencies are predicted to have the biggest disruptive impact over the next 20 years, according to the Future of Payments Report 2021 by PwC.
“CBDCs — digital tokens or electronic records that represent the virtual form of a nation’s currency — along with private sector cryptocurrencies are predicted to have the biggest disruptive impact over the next 20 years,” said the report on Saturday (June 5, 2021).
In the PwC survey, financial services organisations in Europe, the Middle East and Africa with more than US$5bn in revenues cited “market uncertainty and potential disruption,” such as the introduction of CBDCs, within their top three concerns.
As an example, the report cited Diem, a cryptocurrency proposed by Facebook. Backed by a basket of sovereign currencies, such cryptocurrencies “could replace account-based payments with a tokenised system of non-sovereign payment systems,” the report said.
The PwC report also predicted that scepticism of central banks about the potential of private cryptocurrencies to undermine the conduct of monetary policy may shift.
“Scepticism within central banks about the potential of private sector cryptocurrencies to undermine the conduct of monetary policy may begin to shift, as some players have recently said they’re prepared to facilitate use of such digital assets,” the PwC report said.
A recent BIS survey suggests that 60 per cent of central banks are considering CBDCs, and 14% are actively conducting pilot tests, the report noted.
China may be first to launch its digital renminbi
“Observers believe that China may be the first to launch its digital renminbi — or “e-yuan” — at the Winter Olympics next year, in what may be seen as a prelude to the decentralisation of finance,” the report said.
The report said that the financial services industry is in the midst of a significant transformation, accelerated by the COVID-19 pandemic. And with the key role being played by, digitisation in the financial lives of more and more of the world’s population, electronic payments are at the epicentre of this transformation.
Global cashless payment volumes are being predicted to increase by more than 80 per cent from 2020 to 2025, from about 1trillion transactions to almost 1.9 trillion, and to almost triple by 2030.