US critics deride it as the “Biden coin”, Europeans worry their privacy is at risk, while in China few are prepared to ditch tried-and-tested payment apps for the state-backed equivalent.
About 85 central banks are engaged in projects to create digital currencies, according to figures from the Bank for International Settlements.
Among them is the Bank of England, which said last month it was “likely” that the UK would eventually need one.
Cheaper and faster payments, more financial inclusion and the crowding out of cryptocurrencies and Big Tech are the aims.
Yet governments’ enthusiasm is not matched by the citizens they represent, many of whom view central bank digital currencies, or CBDCs, as an encroachment into their private lives and are unsure what benefits the projects are supposed to deliver.
“Central banks are putting the technical preparations in place,” said Eswar Prasad, professor of international trade policy at Cornell University.
“But they have realised there is more broad public and political support needed before moving forward.”
A CBDC could also have radical implications for private lenders, which would face liquidity shortages if a flood of money were shifted into state coffers.
Policymakers could impose holding limits — or offer limited or no interest on deposits — to stop that happening, but that would impede take-up of CBDCs.
“It would be an embarrassing failure if [a CBDC] is not used,” said Harald Uhlig, economics professor at the University of Chicago. “But if you make it too attractive you’re eating the banks’ lunch.”
In countries where CBDCs have been launched, adoption has been piecemeal.
In Nigeria — one of four jurisdictions to launch a digital currency for the public alongside the Bahamas, the Eastern Caribbean, and Jamaica — less than 0.5 per cent of citizens used the eNaira more than a year on from its October 2021 launch.
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