Is central bank digital currency the future of money?
The future of money is digital and it’s happening right now. Today, more and more people are turning to digital methods of payment. It’s estimated that by 2025, digital payments will account for more than half of all transactions worldwide.
One of the reasons for this shift is the increasing popularity of mobile devices and apps. Another is the rise of digital currencies, which are becoming more and more accepted as a form of payment.
So, what does the future of money look like?
Central bank digital currencies (CBDCs) will likely play a big role. CBDCs are digital versions of a country’s fiat currency, which are backed by the central bank.
There are several advantages of CBDCs. For one, they’re more efficient and cost-effective than traditional fiat currencies. They can also be used to combat financial crimes, such as money laundering and terrorist financing.
What’s more, CBDCs could help to boost economic growth and inclusion. For example, they could be used to provide financial services to people in remote areas or to help small businesses access financing.
In Africa, several central banks are already exploring the possibility of issuing CBDCs. The continent is home to some of the world’s fastest-growing economies, so it’s an ideal testing ground for new economic technologies.
The Central Bank of Kenya issued a discussion paper in February this assessing the need for a central bank digital currency (CBDC) in the country and seeking feedback from Kenyans on the technology
The Bank of Ghana is one of the central banks that’s looking into CBDCs. The bank’s governor, Dr. Ernest Addison, has said that a CBDC could help to reduce the cost of transactions and make it easier for people to access banking services.
Nigeria is the first country in Africa to launch a CBDC. The digital currency known as the enaira is currently in the second phase of what is already turning out to be a successful pilot. As of August 2022 the e-naira had reached 840,000 downloads, with about 270,000 active wallets comprising over 252,000 consumer wallets and 17,000 merchants.
Central bank digital currencies have the potential to transform the way we use money. And, with more and more central banks exploring the idea, it’s only a matter of time before they become a reality.
So, what do you think? Is central bank digital currency the future of money? Or is it a recipe for disaster?
