By
Bhushan Akolkar
May 13th, 2024
According to the survey, progress in the global development of CBDCs has continued since last year, with a particular emphasis on emerging economies where CBDCs are viewed as a means of providing financial access to unbanked individuals.
The Bank for International Settlements (BIS) has released its 2022 survey on central bank digital currencies, revealing that approximately 24 central banks from developed and underdeveloped economies plan to introduce their own Central Bank Digital Currencies (CBDCs) in the coming years. The survey gathered responses from 86 central banks from around the world, highlighting the growing interest in digital currencies and their potential impact on global financial systems.
The BIS has been conducting the CBDC survey for six years to understand the motivation and intentions behind central banks’ involvement in CBDCs, focusing on enhancing cross-border payments.
So far, only four central banks worldwide have officially launched their own digital currencies. However, the latest BIS survey shows a significant increase in interest among central banks, with 93% of respondents actively engaged in CBDC-related work.
Furthermore, the survey reveals that 60% of central banks stated that the emergence of stablecoins and other crypto assets had accelerated their efforts in developing CBDCs.
Central Banks Could Introduce Nine Wholesale CBDCs
While interest in retail CBDCs was higher than in the wholesale version, the survey indicates that two dozen central banks plan to have their digital currencies in circulation by the end of the decade. Within the retail space, 11 central banks are planning to join countries like the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria, which already have live digital retail currencies. On the wholesale side, nine central banks intend to introduce wholesale CBDCs, which could provide financial institutions with access to new functionalities through tokenization.
“Based on the number of central banks that indicated that they would be very likely to issue a CBDC over the next few years, it may be that there will be 15 retail and nine wholesale CBDCs publicly circulating towards the end of this decade,” the survey states.
Central Bank Progress in the Development and Testing of CBDC
According to the survey, progress in the global development of CBDCs has continued since last year, with a particular emphasis on emerging economies where CBDCs are viewed as a means of providing financial access to unbanked individuals. The BIS also suggests that if retail CBDCs are introduced, they will likely complement and coexist alongside existing domestic payment methods.
For instance, the Swiss National Bank plans to issue a wholesale CBDC on Switzerland’s digital exchange as part of a pilot program, while the European Central Bank is moving forward with its digital euro-pilot, aiming for a potential launch in 2028. Other countries such as China, India, and Brazil have also announced plans to introduce their separate digital currencies soon.
However, the survey raises concerns regarding stablecoins and crypto assets, noting that if widely used for payments, they could threaten financial stability. Recent events in the crypto market, including the fall of TerraUSD and FTX and the bankruptcy of banks servicing crypto providers, have heightened these concerns and triggered sell-offs among investors.
Approximately 40% of the central banks surveyed have conducted studies on the usage of stablecoins and other crypto assets among consumers or businesses, indicating a growing recognition of the need to understand the implications of these digital assets on the stability of financial systems.
The BIS survey underscores the increasing momentum behind CBDCs, with many central banks actively exploring their potential implementation. As these digital currencies continue to evolve, they have the potential to reshape the future of global economies, enhancing financial stability and revolutionizing cross-border payments.