2023-Public-Sector-Perspectives

Marie Geraghty Innovation Catalyst – Digital Assets, Treasury and Trade Solutions Partnership and Innovation, Citi Lisa Rabbe Former Senior Policy Advisor, Citi Central Bank Digital Currencies: Opportunities, Challenges and Interoperability C entral bank digital currency (CBDC) initiatives have tripled in number since 2020, with more pilots launched in 2022 following challenging developments with cryptocurrencies and stablecoins. Around the world, 105 countries, representing over 95% of global GDP, are exploring a CBDC compared to just 35 countries in May 2020; 50 countries are now in an advanced phase of exploration (development, pilot, or launch). 1 The motivations for central bank interest in CBDCs, and the models they are adopting, vary widely. The maturity of existing payments and banking systems are important factors, as is the retail uptake of cryptocurrencies. CBDCs could be one of multiple responses to situations where more efficient, always available payments are needed. Cryptocurrencies, stablecoins and tokenized and blockchain-based deposit accounts could also play roles in the future of money. Instant payment schemes have already made significant headway around the world, with dozens now operational and volumes increasing daily. Interoperability between different types of digital money will therefore be critical to the smooth functioning of the financial system for individual nations and globally. 1 https://www.atlanticcouncil.org/cbdctracker/ Citi Perspectives for the Public Sector 49