31% of Central Banks Have Delayed CBDC Plans Due to Regulatory Concerns: Survey

A significant portion of central banks worldwide have delayed their plans for launching central bank digital currencies (CBDCs), citing regulatory challenges and shifting economic priorities.

A February 11 report by the Official Monetary and Financial Institutions Forum (OMFIF) and security firm Giesecke+Devrient Currency Technology surveyed 34 central banks on their CBDC development progress.

While most remain committed to launching a CBDC, approximately 31% have postponed implementation due to a range of concerns.

Regulatory Uncertainty and Economic Challenges Slow CBDC Development

The report highlights that delays stem from regulatory and governance uncertainties, as well as unexpected economic challenges that have taken priority over CBDC development.

Additionally, the study noted that establishing CBDC-related legislation depends not just on central banks’ technical capacities but also on political will.

Political factors have also played a key role in some of these delays.

In January, U.S. President Donald Trump signed an executive order banning the establishment, issuance, and circulation of a CBDC in the United States.

While this move was welcomed by some in the crypto industry, others expressed concern that it could deter international CBDC development.

Beyond politics, central banks also cited economic pressures as a reason for postponing CBDC launches.

One central bank reported that rising inflation and debt issues led to a delay, while others stated they would scale back research to focus on more immediate payment system challenges.

Unlike in previous years, the OMFIF survey found that technical barriers are no longer the primary challenge in CBDC development.

While concerns such as offline transactions, privacy, and interoperability were once major obstacles, only one respondent in the survey cited privacy concerns as a reason for delay.

Despite these setbacks, most central banks surveyed still anticipate issuing a CBDC in the future.

However, the study noted a shift in sentiment regarding CBDCs.

The percentage of central banks inclined to issue a CBDC has dropped to 18%, down from 38% in 2022, indicating a decline in enthusiasm.

At the same time, the share of banks less inclined to launch a CBDC has increased by 15%, compared to 0% in 2022, reflecting growing skepticism or shifting priorities among policymakers.

Balancing CBDC Benefits and Risks

The Human Rights Foundation, which launched a CBDC tracker in November 2023, notes both the advantages and risks of digital currencies.

CBDCs could improve payment efficiency and expand financial inclusion, particularly for underbanked populations. H

owever, critics warn that they could compromise privacy, increase government surveillance, and introduce new risks of corruption.

For now, traditional instant payment systems remain the preferred solution for central bankers.

The BIS’s Project Nexus, which relies on the ISO 20022 standard, is creating a unified platform for linking instant payment systems globally.

Meanwhile, projects like Agora, involving wholesale CBDCs, are exploring tokenized solutions.

Just recently, India’s Reserve Bank (RBI) announced that it is moving forward cautiously with the rollout of its CBDC, the e-rupee.