Digitization of money advances at high speed, and digital currencies of central banks (CBDC) are positioned as one of the most transformative tools of the global financial system. According to data from the International Payment Bank (BIS), 24 central banks could have launched their own CBDC before this decade is over. A trend that are already considering more than half of the countries of the world, responsible for more than 95% of global GDP.
In this context, the Financial Technology firm Giesecke+Devrient (G+D) has identified five key factors for these new digital instruments to be successfully developed and deploy all its potential. According to estimates from the World Bank and the IMF, CBDC could give access to financial services to 1,400 million people worldwide, many of them for the first time.
“A CBDC infrastructure constitutes the basis of an ecosystem in which innovative business models can prosper. Creates new opportunities for growth and competition, while placing a vital role in the progress of financial inclusion, equality and equity”highlights Raoul Herborg, general director of Digital Currency of Central Bank in G+D.
Digital Coins: 5 Keys
- For G+D, a digital currency should be easy to use, but also safe and reliable, even without constant Internet access. “A CBDC must comply with the highest safety and resilience standards, without compromising user privacy,” says the company. This requires an integral approach that includes external audits, continuous penetration tests and the ability to manage at least 100 transactions per second for every million users.
More than half of the countries already explore the issuance of a CBDC, which could revolutionize access to financial services worldwide
- The offline functionality, the second great identified pillar, is presented as essential. G+D Remember that, like cash, digital money must even work on exceptional scenarios such as electric or network cuts. “The recent blackout in the Iberian Peninsula highlights the critical need to have systems that operate without connection,” says the company, which has already participated in successful evidence of this type in countries like Ghana.
- Interoperability is another key elements. According to G+D, CBDC should be integrated without friction into existing financial infrastructure, from cash management platforms to Fintech ecosystems, thus allowing new payment models and digital services to flourish on a solid base.
- The fourth fundamental component is cross -border compatibility. For G+D, an ideal CBDC should facilitate international payments, reduce operational costs and mitigate risks such as breaches or delays in liquidations, something especially valuable for developing countries.
- The last factor underlined by the company is clear regulation and citizen participation. G+D points out that central banks must establish transparent standards on key issues such as privacy, interoperability and cross -border payments. He also insists that an open communication with the public is essential to generate trust and foster adoption.
Thus, the race towards sovereign digital currencies not only accelerates, but begins to be outlined as a way to modernize the global financial system, make it more accessible and prepared for the 21st century challenges.
