Will CBDCs have positive or negative effects on financial inclusion?

By Puja Sharma

Respondents in MENA offer optimistic views on CBDCs for financial stability and financial inclusion

A global survey on Central Bank Digital Currencies (CBDC) released today by CFA Institute, the global association of investment professionals, examines the views of its membership on the possible risks and benefits of CBDCs, including their potential effect on financial stability and financial inclusion.

The survey, conducted among CFA Institute members globally, found limited understanding of and support for CBDCs overall. Less than half (42%) of respondents believe that central banks should launch CBDCs, while 34% disagreed. Only 13% said they had a strong understanding of CBDCs.

However, respondents surveyed in the MENA region had a significantly more optimistic outlook. Almost two in three (63%) expressed their belief that central banks should launch CBDCs, and almost three quarters (73%) said they would use a CBDC in either a professional or personal capacity if it was offered by a central bank.

The results reflect trends in other emerging markets which are typically more receptive to the potential benefits and usefulness of CBDCs. The positive sentiment amongst MENA respondents follows the recent announcement of ‘The Digital Dirham’ initiative by the UAE Central Bank, which will see the introduction of a form of digital currency issued and guaranteed by the central bank.

In all markets, the top reason cited in our survey to support launching a CBDC was to accelerate payments and transfers, and in MENA there is a belief that CBDCs can provide efficiency, convenience, and security to both personal and professional transactions. Meanwhile, the chief concerns are focused on three issues: cybersecurity and fraud, data privacy, and lack of use cases.

The view expressed by respondents in the MENA region on the potential benefits of CBDCs for financial stability and inclusion were more positive and optimistic than the global average. More than half (56%) of respondents believe CBDCs would enhance overall financial stability, whilst 54% agree that CBDCs are likely to enhance financial inclusion for under-served economic sectors or populations. However, public acceptance of a CBDC is not assured globally, presenting an opportunity for central banks to build public support for CBDCs.

When considering the impact of CBDCs on private cryptocurrencies, 49 percent of MENA respondents stated that CBDCs and cryptocurrencies can coexist. This viewpoint acknowledges the value of both digital assets and government-backed currencies can have in fostering a thriving digital economy.

Commenting on the survey findings, Antoine Shehadeh, Senior Director, MENA at CFA Institute, said, “Whilst there is still much work to be done to ensure successful implementation and widespread adoption of CBDCs, our survey demonstrates there is strong appetite in emerging markets such as MENA, but success requires that central banks engage more with the public and market participants on the potential benefits of CBDCs.

“Acceptance by end-users will be critical for any central bank digital currency, and the region’s positive response paves the way for a future where digital currencies play a vital role in advancing financial systems and empowering individuals and businesses across the region. By addressing concerns related to cybersecurity, data privacy, and highlighting practical use cases, central banks will be better equipped to encourage individuals and businesses to adopt CBDCs.”