Several groups of researchers across three continents pioneered by the Massachusetts Institute of Technology (MIT) Digital Currency Initiative (DCI) as well as other associated agencies have been tapped to analyze the inclusion of retail Central Bank Digital Currencies (CBDC). The results of the research which has been ongoing for the past fifteen months were released on Friday.
The results were based on a field survey in India and Indonesia in Asia, Nigeria in Africa, and Mexico in North America. MIT DCI, Maiden Labs, UVA, and IMTFI collaborated closely with experts in each of the aforementioned countries tackling questions related to the potential use cases of a CBDC and the policies that will benefit the poor.
According to a published statement, one key question that was investigated is “What digital-currency technical and policy design choices are necessary for mitigating the risks of systemic harm to the poor?” Another subject that was considered included “What needs could CBDC solve, if any, for the unbanked, underbanked, poor consumers, women, or other marginalized groups in low- and middle-income countries?”
More precisely, the research explored CBDC design options, previous infrastructures in the financial industry as well as user experience using real life samples (humans). Emphasis was placed on the disparity which exist between intermediated and non-intermediated (cash) payments.
“An important potential risk is that an intermediated CBDC will replicate the design – and therefore the harms – of existing intermediated money forms,” the research result stated
Are Past CBDC Researches Unfruitful?
MIT’s DCI acknowledges that there have been several types of research conducted by different entities but also only “few if any proponents have offered practical insight into how CBDC will promote greater access to financial services.” Maiden Labs and the MIT Media Lab also supported this claim.
These researches have birthed CBDC pilot projects like the Nigeria e-Naira, and the Indian digital rupees which leverage only intermediated models, remaining neutral on the blockchain, or distributed ledger technology (DLT).
Overall, it turned out to be that trust is a major concern for many interested users especially “considering the rise of authoritarian regimes around the world, the acceleration of the surveillance state, and the increasing challenge of regulating the technology industry, it is far from self-evident that people should trust a CBDC.”