Central Banks Face Delays In CBDC Implementation Amid Regulatory Concerns

According to Cointelegraph, nearly one-third of central banks have postponed their plans to launch central bank digital currencies (CBDCs) due to regulatory issues and shifting economic priorities. A survey conducted by the Official Monetary and Financial Institutions Forum (OMFIF) and Giesecke+Devrient Currency Technology revealed that while some central banks are proceeding with their CBDC initiatives, approximately 31% have delayed their implementation. The report highlights that the primary reasons for these delays include concerns over regulatory and governance frameworks, as well as unexpected economic challenges that have taken precedence over CBDC development. It also notes that the establishment of legislation is often influenced by political will rather than the central bank's technical capabilities or policy decisions. U.S. President Donald Trump recently signed an executive order on January 23, prohibiting the establishment, issuance, circulation, and use of a CBDC in the United States. While the crypto community largely welcomed the ban, industry leaders expressed apprehension about its potential impact on other nations exploring CBDC development. The survey also identified economic and technical challenges as factors contributing to the delay in CBDC issuance. One central bank cited inflation spikes and debt distress as reasons for postponing its timeline. Additionally, some banks have decided to scale back their CBDC research efforts to concentrate on other payment-related issues. The OMFIF noted that technical challenges are no longer a significant barrier for most central banks, as previous surveys had identified issues such as offline payments, privacy, and interoperability with existing payment systems as obstacles. Despite these challenges, the survey found that the proportion of central banks inclined to issue a CBDC has decreased to 18%, down from 38% in 2022. Conversely, the number of banks less inclined to issue a CBDC has risen by 15%, compared to 0% in 2022. Nonetheless, the majority of central banks surveyed still anticipate issuing a CBDC within the next decade. The Human Rights Foundation, which launched a CBDC tracker in November 2023, acknowledges the potential benefits of CBDCs in enhancing payment efficiency and expanding financial inclusion for underserved populations. However, it also warns of potential drawbacks, such as privacy infringements and the risk of government corruption.