A new report from the Official Monetary and Financial Institutions Forum (OMFIF) calls for decisive action from central banks on the issuance of central bank digital currencies (CBDCs). Titled CBDCs: It’s Time for Action, the study argues that hesitancy over implementation risks delaying crucial innovations in financial inclusion, resilience, and monetary sovereignty. The findings underscore the growing global momentum behind CBDCs while highlighting the challenges that remain in their design, adoption, and integration into the financial system.
Central Banks Increasingly Committed to CBDCs
According to the OMFIF study, an increasing number of central banks are expecting to issue a CBDC in the near future. The report reveals that 72% of respondents anticipate launching a CBDC, with nearly half (48%) expecting issuance within five years—up from 32% in 2023. Despite this, delays remain a reality, with 31% of central banks having pushed back their launch timelines due to regulatory, economic, and technical considerations.
Emerging markets appear to be moving faster than their developed counterparts, driven by financial inclusion goals. In contrast, developed economies are more focused on preserving monetary sovereignty and ensuring central bank money retains its role in the evolving financial landscape. This divide underscores how CBDCs are being viewed not just as payment instruments but as strategic tools to address macroeconomic challenges.
Technical Hurdles Are Being Overcome
A key finding of the report is that central banks have made significant progress in resolving many of the technical barriers to CBDC implementation. Previously, concerns around privacy, offline payments, and interoperability posed major roadblocks. However, OMFIF’s latest survey indicates that technical challenges are no longer the primary obstacle for most central banks.
Offline payments, once seen as one of the most difficult features to implement, are now being addressed more effectively, with several successful pilot programmes demonstrating their viability. Similarly, satisfaction levels among central banks regarding cybersecurity and interoperability have improved, reflecting ongoing technological advancements. However, user experience remains a top concern, with 27% of respondents identifying it as the most challenging aspect of CBDC design.
A Growing Case for Timely Action
The study stresses that central banks must act swiftly to ensure CBDCs remain relevant in the rapidly evolving financial landscape. The rise of private digital currencies and stablecoins, coupled with the continued decline in cash usage, means that waiting too long could weaken the role of public money. OMFIF argues that central banks have a duty to maintain trust and stability in the financial system by ensuring that digital public money remains widely accessible and functional.
Offline functionality is emerging as a crucial aspect of CBDC design, particularly for emerging markets aiming to improve financial inclusion. The ability to use digital currency without a constant internet connection would provide a cash-like experience, enabling broader adoption in rural or underserved areas. Moreover, the ability of CBDCs to provide instant settlement and programmable payments opens the door for enhanced financial services, automated transactions, and greater efficiency in digital commerce.
The Importance of Public-Private Collaboration
A central theme of the report is the need for close collaboration between central banks and the private sector. CBDCs, according to OMFIF, should not be designed as standalone solutions but rather as platforms that integrate seamlessly with existing financial infrastructure. Ensuring interoperability with bank deposits, digital wallets, and instant payment systems is vital for widespread adoption and functionality.
Public-private partnerships will also be key in overcoming concerns around adoption. One of the biggest risks identified in the report is the potential for low uptake among users and businesses. To mitigate this, central banks must engage with stakeholders early in the development process, ensuring that CBDCs offer tangible benefits over existing payment options.
Looking Ahead: CBDCs in a Tokenised Economy
Beyond domestic implementation, the OMFIF study highlights the role that CBDCs could play in cross-border payments. Projects such as Project Icebreaker and Project Dunbar have demonstrated how multi-CBDC platforms could streamline international transactions, reducing costs and increasing efficiency. However, achieving this vision requires standardised regulatory frameworks and technical interoperability between different jurisdictions.
CBDCs also have the potential to act as foundational infrastructure for the tokenised economy. By providing a risk-free digital asset that interacts seamlessly with tokenised deposits, securities, and other digital financial instruments, CBDCs could enhance financial stability while unlocking new use cases in decentralised finance and automated payments.
The Time for CBDCs is Now
OMFIF’s latest report makes it clear that the time for hesitation is over. While challenges remain, the momentum behind CBDCs is undeniable, and central banks must take decisive steps to move forward with issuance. With financial inclusion, economic resilience, and monetary sovereignty at stake, policymakers have a critical opportunity to shape the future of digital money. Delays in decision-making could allow private digital currencies to dominate, potentially undermining the role of central banks in the global financial system.
As the digital economy evolves, CBDCs represent a crucial tool for ensuring that public money remains accessible, functional, and relevant. The key to success will be proactive policymaking, technological investment, and a commitment to innovation that balances regulatory oversight with financial progress.
Click here to download OMFIF’s report: CBDCs: It’s Time for Action
