As a financial services innovation, Central Bank Digital Currencies (CBDCs) are likely to play a pivotal role in shaping the Future of Value Transfer. Most Central Banks worldwide are now in various stages of their evaluation of launching their national digital currencies. Interest in CBDCs has grown exponentially in the last few years in response to innovation in payments and technology, alongside the disruption caused by Covid-19. This shift has also been triggered by the growing interest and influence of cryptocurrency as a medium of exchange and as an asset class. As a region, APAC has been the frontrunner in this space, with seven out of the top ten global CBDCs projects being conducted in the APAC region alone. With increasing globalization and digitization of financial services, CBDCs have the potential to create a Future of Value Transfer platform that contributes to a more resilient, innovative, and competitive payment system for households, businesses and economies. CBDCs are likely to drive efficiencies and effectiveness of a jurisdiction's payments system by ensuring that its users access safe digital money. CBDCs will provide users with a sovereign option as compared to other less safe digital instruments, which may lead to less reliable payments, relatively volatile store of value and potentially erode monetary and financial stability. It may be especially important in the future as the use of cash declines and new forms of "value transfer alternatives" become more widely used in the payment cycle. Banks and financial services players need to prepare themselves for this inevitability and plan for the impact that it is likely to have on their profit pools, customer propositions, technology models and balance sheets.
