A study conducted by tech giant IBM and the Official Monetary and Financial Institutions Forum (OMFIF) has suggested a central bank digital currency could start circulating within five years.

According to the study, titled “Retail CBDCs: The next payments frontier,” these central bank-issued digital currencies are going to be fiat currencies and will exist “either as a complement to or as a substitute for notes and coins.”

The report suggests that the first CBDC is going to be issued by a central bank outside of the G20, with a smaller and less complex economy. Its goal, it says, will likely revolve around driving resilience of a national payments system or improving financial inclusion.

The report reads:

The principal conclusion is that we are likely to witness the introduction of a central bank — that is fiat — retail digital currency within the next five years, either as a complement to or as a substitute for notes and coins.

It involved central banks from 13 advances economies and 10 from emerging markets, and was conducted between July and September of this year. It notes that 73% of global banks are in favor of CBDCs, as many as 82% noted a concern surrounding CBDCs is related to the risks associated with conducting digital bank operations at higher speeds, and with the availability of such a currency offline, to replace cash.

The study also revealed that over half of the central bank representatives are concerned about project like Facebook’s proposed cryptocurrency Libra, as it could undermine nations’ monetary sovereignty.

It concludes:

Central banks are responding to the reality that digital currencies, either privately or publicly issued, will soon be part of the global monetary system, and that it is in their interest to ensure they are neither left behind nor displaced.

As CryptoGlobe reported, Dutch bank ING predicted earlier this month that we would see a central bank digital currency within the next few years.

Featured image via Unsplash.