Thread by @Jonas__Gross

The @ecb published an interesting paper on the adoption of central bank digital currencies (#CBDCs). In this paper, the authors suggest to take on a #user-centric perspective. This user-centric focus is very important for the success of a CBDC.

Key highlights 👇(1/12)

1️⃣ Retail CBDCs (rCBDCs) "will likely face challenges in entering the market and being adopted by consumers and merchants." (2/12)

2️⃣ The authors talk about lessons from two "failed initiatives", namely in Finland and Ecuador, which shows that the ECB is interested in broad adoption for the #digitaleuro. (3/12)

3️⃣ "A consensus seems to be growing among central banks in some regions that the focus must be on users’ needs and that a certain level of adoption needs to be achieved" (4/12)

4️⃣ Key attributes for payment instruments to be used by end-users are costs, benefits and rewards, ease of use, transaction speek, privacy, security (5/12)

5️⃣ "As data privacy and security awareness grows, it is becoming increasingly important for industry players to instil trust in payments. [...] (6/12)

[...] A recent survey on data privacy found that one in three United States citizens has been exposed to data compromises, and almost half of consumers report having little to no control over their data (Sides et al., 2019). [...] (7/12)

Another survey shows that 30% of banking consumers claim that payment data usage is “an invasion of privacy that should be prohibited” (8/12)

6️⃣The paper concludes that "ensuring the desired level of adoption of rCBDCs may impose significant constraints on central bank design choices and policy goals. [...] (9/12)

[...] In some settings, central banks may find themselves on the horns of a dilemma in seeking to balance the needs to preserve the central bank’s hierarchy of policy goals, increase the chances of adoption and use of rCBDCs [...] and avoid any adverse economic effects." (10/12)

7️⃣ "A likely scenario in a more distant future is that stablecoins will have a significant impact on the global retail payments market" (11/12)

Access the paper here 👇 ecb.europa.eu/pub/pdf/scpops… (12/12)