Today, the CFA Institute, the international association of investment professionals, published the results of a global survey exploring the implications of central bank digital currencies (CBDCs) for capital markets and investment practitioners. The report notes vast differences across countries and age groups, pointing to a still lukewarm acceptance of CBDCs in advanced economies and among older individuals. However, It concludes that public opinion remains an empty slate, which might offer governments an opportunity to educate and build public support.
Limited CBDC understanding and support
The survey received over 4,000 responses from CFA Institute members from around the world. Forty-two per cent said central bankers should launch CBDCs, compared to 34% who believed they should not. However, willingness to use a CBDC was generally higher in emerging markets (67%) than in advanced economies (43%). The Asia-Pacific region, and individual countries like India and China, exhibited the most favorable views.
Interestingly, only 13% reported having a solid understanding of CBDCs. By contrast, forty per cent said they had little or no knowledge about the subject, with the majority of those respondents under the age of 30. Yet despite limited understanding, younger people are the most likely to use CBDCs in the future. More than half of individuals below 44 years old are open to the idea, but it drops sharply thereafter.
Motivations and use cases
Globally, increasing payment efficiency emerged as the top cited reason to support the development and launch of CBDCs. However, emerging markets also place great emphasis on enhancing financial inclusion. Respondents say cybersecurity and privacy safeguards will play an important role in future acceptance, but the survey also highlights the need for interoperability and offline capabilities.
The lack of actual use cases is also a major concern. For example, using CBDC for programmability and automation only ranked 5th in professional use cases, despite the central bank perception of its importance. Clearing and settlement activities and P2P transfers are much more appreciated, but the report points to a general need for greater private sector consultation to “better understand the demand side of the debate.”
Regarding compatibility with cryptocurrencies, 55% think CBDCs and crypto will coexist, compared to 25% who disagreed (the remainder did not know). While 58% believe private money will always be inferior to government money, 61% believe quantitative easing reduces trust.
Building public support for CBDC
Ultimately, “acceptance by end-users will be critical for any central bank digital currency,” says Olivier Fines, Head of Advocacy and Policy Research and one of the report’s authors.
The CFA notes that key questions remain and that much work needs to be done to adopt CBDCs successfully, but that public opinion remains largely an empty slate. This gives governments and central banks an opportunity to build support for CBDCs through education, public consultation, and transparent reporting.