Economists across the globe continue to brand CBDCs as the next big financial disruptor, given that they are backed and run by national central banks. Back in March at a Bank for International Settlements webinar, People's Bank of China Digital Currency Institute Director Changchun Mu took the first swing at a Chinese digital finance leadership role by proposing global standards
that all CBDCs could follow to ensure a smooth transition and maintain ease of cross-border payments. Mu's comments included stressing a need for a scalable foreign exchange platform, consistent and synchronised information and fund flow, and interoperability across jurisdictions.
As Fitch Ratings asserted in a report earlier this month, a major cause for celebration in the coming rise of national reserve-backed digital currencies is the opportunity for greater inclusion
in jurisdictions with loosely regulated financial sectors that have resultingly been cut off from global markets due to de-risking by major financial institutions. The higher guarantees that CBDC-involved transactions will be free from elements of financial crime, particularly laundering the proceeds of corruption or public fund embezzlement, is surely going to result in a massive wave of investment into developing nations home to ripe investment portfolios (look no further than the DRC's mining sector).
Although a number of CBDC pilot programmes are well underway (the US Federal Reserve has expressed wariness over the concept, but is nevertheless running such a pilot
through the Federal Reserve Bank of Boston and MIT), no central bank has yet launched digital currencies. This leaves digital payment service providers scrambling to race to the top in the remaining months and dwindling years before CBDCs become a household name.