At least three countries will have turned to central bank digital currencies (CBDCs) in place of their current fiat currencies by 2030, according to the findings of a report by a European think tank released this week.
Dutch fintech research group dGen published the findings in its report “CBDCs: Geopolitical Ramifications of a Major Digital Currency”, suggesting that at least 3-5 countries would have their own central bank-backed digital currencies in place by the start of the next decade.
The report was put together with the help of Standard Chartered Bank, the Frankfurt School and the European Central Bank. While stopping short of predicting exactly which countries will make the switch by 2030, the report said significant progress had already been made in countries like Sweden and the Bahamas.
The dGen report also forecasts that a digital yuan issued by China would overtake the euro by 2025 if the European Central Bank does not develop its own CBDC.
Philipp Sandner, head of the Frankfurt School Blockchain Center, said the ECB’s lack of progress on CBDCs would hold it back long-term.
“The ECB’s reaction has been too slow. Especially, the benefits from a CBDC for the industry, e.g., based on programmable money, are currently neglected. Given Libra and the DC/EP [digital yuan], the ECB has to react quickly to keep its geopolitical position.”
However, the report said that even with a digital yuan, it is unlikely the U.S. dollar will be shifted as the global reserve currency at any time in the near future.
The report highlights the important role CBDCs are likely to play in the global monetary system in future, and underlines the need for central banks to more aggressively explore the technology.
With countries like China already ahead of the pack, the report is a reminder of the need for urgent action on CBDCs.