If blockchain tech improved, most central banks would issue a CBDC: IBM report

26 Oct, 2018
by Richard Allen
If blockchain tech improved, most central banks would issue a CBDC: IBM report

report released on Friday by IT-giant IBM concludes that most of the central banks included in the poll believe issuing a central bank digital currency (CBDC) is the logical next step, but are unsure if blockchain technology lives up to its hype.

IBM and OMFIF, an independent think tank, asked 21 central banks between July and September on their opinion on CBDC and distributed ledger technology. The report found that 38% are already trialing wholesale CBDC.

While the majority of the report’s respondents aren’t actively involved in the development of a CBDC, the report highlights that “A central bank-issued wholesale CBDC would remove the credit risk and provide stability in the token’s value.”

When asked about the potential of blockchain, most respondents expressed concern over the nascent technology’s ability to live up to its promise. “61% of central banks said a blockchain may not be necessary as they have observed few efficiency gains during trials, given that the technology is still in early stages of development,” the report reads.

Moreover, almost 76% of respondents stated that they are unsure where distributed ledger technology is able to deliver on its promise.

The report also includes a list of all the current examples of how various central banks are testing blockchain for use in interbank payments, such as South Africa’s Project Khokha, and Canada’s Project Jasper.

However, it doesn’t seem likely that any of the listed blockchain projects will lead to the creation of a CBDC, as the report reads, “Central banks concluded that blockchain systems must improve before they can overcome issues of scalability and speed,” stating that most are satisfied with their current payment systems.

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