Indians show strong favorability towards Central Bank Digital Currencies (CBDCs): Survey

Developing markets, including India, emphasised the role of CBDCs in enhancing financial inclusion, making it a key driver of support for launching CBDCs in these regions.

Overall, the primary reason cited for backing CBDCs across all markets was to facilitate faster and more secure payments and transfers. However, concerns were raised regarding cybersecurity, fraud, data privacy, and the need for more use cases.

Indian respondents showed the most positive perception of CBDCs after China. An impressive 66 percent of respondents expressed their support for CBDCs, one of the highest percentages globally.

Furthermore, an even higher proportion of Indian respondents, 70 percent, indicated their willingness to use CBDCs in their professional or personal transactions if offered by a central bank. However, the main objection raised by Indian respondents against CBDCs was the lack of sufficient use cases.

Additionally, 76 percent of Indian respondents believed that CBDCs should pay interest, the highest percentage globally.

Furthermore, in India, there was a notable level of agreement (59 percent) with the notion that CBDCs would assist central banks in conducting monetary policy to achieve macroeconomic goals. This level of agreement closely aligned with the overall views of emerging markets, which stood at 52 percent.

Stephen Deane, Senior Director for Capital Markets Policies, emphasised the significant difference in attitudes between emerging and developed economies.

Emerging markets displayed greater receptivity to CBDCs, while respondents in advanced economies were generally more satisfied with the existing financial infrastructure and more skeptical about the necessity of CBDCs.

Sivananth Ramachandran, CFA, CIPM - Director of Capital Markets Policy at CFA Institute, acknowledged India's efforts in promoting technology adoption to enhance financial inclusion. He highlighted the success of initiatives like UPI and India's pioneering global role in fintech innovation.

The Reserve Bank of India's pilot on CBDCs had already gained significant traction, with over 1.3 million customers and 300,000 merchants using CBDCs as of June 2023. The Ministry of Finance in India had been actively supporting CBDC plans, demonstrating the country's commitment to fostering financial inclusivity and stability.

Globally, a majority of respondents believed that CBDCs could coexist with private cryptocurrencies, suggesting a potential reliable option against private cryptocurrencies.

Policymakers view CBDCs as an avenue to achieve financial inclusivity and stability, particularly due to the volatility of private cryptocurrencies. Indian respondents exhibited a high level of trust in the government (69 percent), making CBDCs a formidable competitor to any non-governmental payment methods and currencies, including privately issued cryptocurrencies.

Despite the favorable perception of CBDCs, there are key questions that need further exploration, such as the implementation and adoption processes, CBDC's role in comparison to other payment instruments, and potential impacts on market structure and financial stability. The road to successful CBDC adoption requires additional research and planning.