But the concept of digital currencies could eventually become an integral part of the central banking system according to a June 27 research paper released by the International Monetary Fund (IMF).
The IMF reportedly drew its conclusion by reviewing data that it had collated from financial institutions operating within all member countries, with 96 organizations responding to a recent survey.
The information showed that several central banks in different countries are open to the idea of issuing a central bank-backed cryptocurrency (CBDC) although there have been warnings against the dangers associated with it.
As per the report, Uruguay, the Bahamas, China, the Eastern Caribean, Ukraine, and Sweden are some of the countries that are already piloting a CBDC project or at least trying to do so. Also, aside from these flock, several central banking authorities like South Africa are reviewing the benefits they could get by releasing a CBDC.
The report also identifies that different countries contemplating CBDC issuance have different agendas. While some consider the innovation to be an alternative to cash, some want it to help reduce banking costs and promote financial inclusion.
Similarities also exist between these countries with the most prevalent being that central banks believe a CBDC would make it easier for them to trace public funds any time, a feature that paper cash lacks.
The surveyed central banks further expressed awareness of some of the dangers associated with a CBDC, with some still doing research and other deciding to launch the digital currency, and then monitor how it grows.
Meanwhile, we reported back in November, that the IMF pledged to devote attention to blockchain technology.