CBDCs have taken the world by storm, more so towards the end of 2021. Many countries started rolling out their own CBDCs or are in the process of doing so. Many more countries are working on their CBDC and will roll it out in due time. The situation is now becoming increasingly institutional, with leading financial institutions backing them. After the Commonwealth Bank of Australia and Central Bank of Brazil, the Bank of England also took a stance in favor of CBDCs and might launch its own very soon.
The Bank of England officials talked about CBDCs in a live stream, with governor Sir John Cunliffe stating that over the coming years, digital currencies will contribute over 20% of all retail purchases. Bank officials also said that the United Kingdom is seeing a steady decrease in the use of cash, especially following the Covid-19 pandemic. In such a scenario, a digital pound CBDC can be the best working solution for both end-users and financial regulators.
CBDCs have immense potential for both transactions and money transfers. The real magic of CBDCs comes to play in cross-border payments. In the traditional cross-border payment methods, the sender and receiver have to incur heavy transaction charges. On a global scale, the amount spent in transaction charges alone is more than a trillion dollars. If CBDCs become an integral part of our everyday economic frameworks, cross-border and domestic payment systems will get an unprecedented push.