Currently, an estimated 1.7 billion people around the world are unbanked, which means they have no access to traditional banking services. This is largely due to factors such as a lack of documentation, remote geographical locations, and low incomes. However, with CBDCs, individuals can have access to digital wallets that can be used to make transactions, transfers, and payments even if they don’t have a traditional bank account. This is because CBDCs allow for instant digital payments that make financial transactions cheaper and more accessible.
Furthermore, CBDCs could enable financial benefits to low-income families, such as receiving government subsidies or other such benefits directly to their digital wallet. This could help alleviate poverty and increase financial empowerment among underprivileged individuals who struggle with accessing the financial system. In addition, CBDCs can help facilitate cross-border payments, which could further enhance global trade and investment opportunities.
However, there are some potential roadblocks in the implementation of CBDCs. One such challenge is the need to create a secure and reliable digital infrastructure to ensure that CBDC transactions are safe from fraud or hacking, which is especially of concern given the sensitive nature of financial transactions. Moreover, ensuring that CBDCs remain decentralized is another important challenge, as CBDCs in the wrong hands can be used to increase government control or for propagating illicit activities.
In conclusion, CBDCs hold immense potential to revolutionize the current financial system and help enhance financial inclusion. By enabling digital transactions, CBDCs can help reduce the cost of financial services and make them more accessible to the unbanked population. This could result in a positive impact on economic growth and poverty reduction, as well as promoting financial empowerment among underprivileged individuals. However, in order for CBDCs to be successful, it is essential to address the potential challenges and implement them with a comprehensive approach that prioritizes security, reliability, and decentralization.