Consumers warming to digital currencies issued by central banks

  • By Elizabeth Fry

Consumers worldwide are increasingly receptive to the launch of digital currencies by the world's central banks, new research from European deep tech company Guardtime found. 

The study across 10 countries found 64 percent of adults would be likely to use a digital currency launched by their country’s central bank with 33 percent saying they would be very likely to use one. 

Just 10 percent of those questioned said they would never use a central bank digital currency (CBDC).  

The study by the data integrity specialist - who is working with several central banks in exploring the potential for digital currencies - found strong support for converting savings into CBDCs and having salaries paid in digital currency. 

Around one in three adults (33 percent) would be willing to convert their savings into a CBDC within a month and another 26 percent would do so within one to six months. Just 11 percent say they would never convert savings into a CBDC. 

The data integrity specialist said up to 30 percent would be happy to have their salary paid in a CBDC within a month with another 27 percent following within one to six months. Around 12 percent would never accept a CBDC payment. 

The launch of a major CBDC may not be that far away - research from the Bank of International Settlements shows 86 percent of central banks are actively researching the potential, 60 percent are experimenting with the technology and 14 percent are deploying pilot projects. 

Guardtime believes these currencies are closer to being launched because the coronavirus crisis has helped to digitise society further and predicts that the first major CBDC could launch within three years.  

“People have embraced rapid digitisation during the coronavirus crisis and that is reflected in the relative enthusiasm for the launch of digital currencies by the central banks," said Lukas Ilves, Guardtime’s head of strategy. 

“It is fascinating to see that 64 percent of people would be willing to use CBDCs – even though they have not yet been launched – and are happy to support and trust central banks to ensure digital currencies are delivered. 

“The work by central banks worldwide on CBDCs has been notable for its speed and coordination and underlines why they are winning the trust of consumers on delivering digital transformation.”  

Still hanging on to cash 

However, the research also showed that consumers would not necessarily want to ditch cash. A sold 31 percent of respondents said they would be willing to carry out more than half of their transactions through CBDCs within a month of a successful launch with 28 percent willing to do so within one to six months.  

Consumers ranked privacy on transactions as the most important attribute of a CBDC followed by ease of use. The ability to use a digital currency internationally even without any internet connection also mattered. 

Guardtime believes the introduction of central bank digital currencies could upend the global economic order.  

“This technology could bring a multitude of benefits such as more efficient trade, greater financial access for millions of people, and crime reduction.  

“But there are important technological barriers to overcome regarding scalability and security."