'These early CBDC pilots are going to disappoint central bankers, blockchain enthusiasts and, most likely, end users,' pbrody writes. Opinion.
ecosystem. Central bankers, wary of the big systemic technical risks that could come from a programming flaw in a national currency, are unlikely to enable Ethereum-style complex smart contracts.
Non-blockchain-using consumers are also likely to be disappointed in many cases. In designing CBDCs, central banks are struggling to balance the convenience of cash, pledges to respect end-user privacy and a strong desire to limit money laundering and criminal activity. Central banks are already discovering how difficult balancing these requirements is likely to be. Nigeria’s eNaira system, for example, requires you have an existing bank account in order to open an account.
Nigeria’s solution is fast and elegant, but has limitations. Specifically, transactions can be tracked , and because it requires an existing bank account, the currency does nothing to “bank the unbanked.” At the consumer level, CBDC experiments in 2022 will offer functionality comparable with familiar consumer payment services – only run directly by the central bank. However, as central banks are not historically known for their consumer services, this may not produce the most compelling user experience. That’s me being understated and diplomatic.A lack of polished user interfaces or sophisticated KYC tools would not be an issue at the wholesale level.
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