What government-issued digital currencies mean for the future of crypto
Digital currencies are here to stay. Whether decentralized like Bitcoin, managed by a private company like the USDC, or controlled by a government like the Bahamas’ sand dollar, the only question is which will prove to be the most popular – and last the longest.
New survey data from intelligence firm Morning Consult has found that consumers in emerging markets are more likely to support a government-controlled digital currency, known as central bank digital currencies, than those in developed markets.
Contrary to framing by policymakers, the data also reveals that consumers worldwide do not differentiate between CBDCs and private cryptocurrencies, with many showing support for both.
CBDCs are still a nascent development, with the Bahamas’ sand dollar, Nigeria’s eNaira and China’s digital yuan three of the most prominent examples, although each has been fraught with obstacles. El Salvador also rolled out a private digital wallet to manage Bitcoin after making the cryptocurrency legal tender last year, which some derisively compared to a CBDC.
Despite the early stage of the technology, governments around the world, including the United States, are exploring the possibility of adoption, often spurred by the rise of cryptocurrencies as a form of digital payment. According to Morning Consult, over 90 state currency authorities are exploring or piloting the issuance of a digital version of their national currency.
Morning Consult’s data supports the assumption that consumers in countries with lower access to banking services and digital payments are more likely to support CBDC, while those in more developed markets have lower demand. In India, for example, Morning Consult found that 36% of adults strongly supported the issuance of a CBDC, compared to just 3% in Japan and 7% in the UK
Politicians and the crypto industry tend to portray CBDCs and cryptocurrencies as opposites at best, and incompatible at worst. In 2021, Federal Reserve Chairman Jerome Powell said in testimony to Congress: “You wouldn’t need stablecoins, you wouldn’t need cryptocurrencies, if you had a digital American currency.”
Still, Morning Consult’s data found that the general public tends to support both CBDCs and cryptocurrencies, or neither, indiscriminately. About 70% of people who believe that cryptocurrencies increase financial stability also support CBDCs, while only 36% of people who believe that cryptocurrencies reduce financial stability support CBDCs.
Sonnet Frisbie, managing director of Morning Consult’s geopolitical risk analysis team, argued that this means the fates of the two are intertwined.
“For governments,” she wrote, “clear messages about how their CBDCs will enhance rather than undermine financial — and by extension macroeconomic — stability will help encourage public acceptance and adoption of the new technology.”
