The global cryptocurrency market is projected to reach a value of $4.9 billion by 2030, according to a report by Allied Market Research.

In line with this rapidly growing market, banks across the globe are continuing to investigate how Central Bank Digital Currencies (CBDCs) could help to meet the needs of their increasingly digitally savvy customers.

While no decision to implement a UK CBDC has yet been taken, the Bank of England has in recent years consulted on what a CBDC could look like, with a public/private partnership having been eyed as the optimal way to make that happen.

For the UK, the main question is how this innovation will deliver tangible benefits to the nation’s economy.

“The implementation of a CBDC could deliver enhanced efficiency when processing payments,” Nicole Sandler, head of digital policy at Barclays, said.

“It could precipitate new innovations, such as programmable money and smart money, delivering an infrastructure that can automate contracts, enable greater control over what money is spent on and provide new ways for consumers to access savings and investment opportunities.”

There do, however, remain some obstacles towards meeting these aims.

Migration of commercial deposits to a CBDC could reduce the amount of commercial loans that the economy can support, which could lead to financial instability.

The impact be on existing payment infrastructures, how consumers would pay using a CBDC on a daily basis, and what the commercial model would be for new firms to offer services in a CBDC environment are all further considerations currently without well-defined answers.

“We must work with our policymakers to answer some of the concerns that could potentially stand in our way and articulate a clear rationale for industry to stand up funds and invest in this new opportunity,” Sandler concluded.

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