The value in CBDC payments will grow from $100m estimated for 2023.

The 260,000% growth in the next decade will be the result of governments seeking to adopt CBDC to boost financial inclusion and compete against cryptocurrencies.

Juniper Research’s study states that by 2030, 92% of the total value transacted via digital currencies will be paid domestically. According to the research, cross-border payments will come later as more countries will implement their own CBDC versions.

Nick Maynard, author of the report, said: “While cross-border payments currently have high costs and slow transaction speeds, this area is not the focus of CBDC development. As CBDC adoption will be very country specific, it will be incumbent on cross-border payment networks to link schemes together; allowing the wider payments industry to benefit from CBDCs”.

What is CBDC?

Central bank digital currency is a digital coin issued by a central bank and pegged to the country’s fiat currency. CBDC is not a cryptocurrency, whose value is determined by market supply and demand.

On 7 February, the Bank of England initiated a formal consultation on potentially launching a “digital pound” called “Britcoin”.

In a similar move, on 3 March Commonwealth Bank, ANZ and Mastercard joined the Reserve Bank of Australia in launching a CBDC pilot in the country.

The pilot project assesses how economically viable a digital currency would be.

In an interview with Retail Banker International, Julia Demidova from fintech company FIS said digital currencies will be a significant source of innovation.

According to Demidova, central banks are looking to stay ahead of the latest trends. These trends include “the evolution of real-time payments and the growing role of digital assets, including CBDCs”.

However, Juniper Research says a lack of commercial product development around CBDCs will limit their utility on the current market. This includes a limited number of well-defined platforms for central banks to leverage.

To date, only 11 countries have launched their own CBDC, according to Atlantic Council. Nigeria is the largest country with an active central bank digital currency. The rest of them are small island states in the Caribbean region.