Kevin Rutter is the research lead at R3.
“CBDC, not bitcoin” is the new “blockchain, not bitcoin.”
Since 2014, discussions of a publicly accessible digital payment vehicle issued by a central bank have matured significantly. Central bank digital currencies (CBDCs) have been the center of many high-level discussions, notably at the Bank for International Settlements (BIS) and the International Monetary Fund (IMF).
The breadth of reports from experienced central bankers validates blockchain technology in a way that crypto-anarchists, armchair blockchain economists, and even millennials that got smoked by buying cryptocurrencies last Thanksgiving (2017), can collectively be proud of.
However, the cruel reality is that consumer adoption of new retail payment innovations is often difficult – whether that innovation is magic internet money or new Sacagawea U.S. dollar coins. Further, just as payment habits with physical cash, credit card, or cell phone use varies from country to country, different regional consumer preferences regarding anonymity, fees or interest payments would persist with a digital manifestation of “physical cash.”
New technologies are cool, but the road to adoption is treacherous – history is littered with the decomposed debris of failed payment innovations that did not provide what consumers wanted.
Approaches in Brazil
Successful and wide-scale CBDC implementation would require architects to consider consumer demand, payment habits, and preferences within a particular country – possibly resulting in idiosyncratic design decisions.
Adding to the growing discourse on the topic, in a recent research report for R3, JP Koning evaluates what a CBDC might look like if it were to be issued by the central bank of Brazil,