By
Mayowa Adebajo
April 24th, 2024
Many of the banks looking to implement CBDC projects are doing so with the hope that a digital asset will complement their physical fiat currency.
A new survey carried out by the Bank for International Settlements (BIS) has said that Central banks representing 20% of the world population would look to issue national digital currencies in the next three years. This was contained in a report by Reuters.
According to the report, the demand for these central bank digital currency (CBDC) projects is being fuelled largely by the declining use of physical cash for transactions. Also, the threat posed by Bitcoin and other digital assets like Facebook-backed Diem, which is formerly known as Libra can no longer be ignored.
Central Banks are Gearing up to Issue Digital Currencies
Many of these banks looking to implement CBDC projects are doing so with the hope that a digital asset will complement their physical fiat currency. The goal of most of them is not to totally eradicate the use of cash in their country’s economic system. The survey pointed out that the banks who have taken their interest rates negative were looking at the possibility of using digital cash to implement this new policy.
Part of the finding of the survey is that central banks in developing countries are most likely to issue a CBDC than those in a major economy. Another finding of the survey is that most central banks have already begun looking at the idea behind the digital currency with some exploring its technicalities and policies while others have gone as far as testing some of its possible design.
China leads the pack with its digital yuan project. Last year, the Asian country tested the efficacy of this currency when it shared $3 million worth of digital yuan to some of its citizens through a lottery scheme. The country has already begun working on a digital yuan compliant ATM and has also begun a second test of the currency.
Other countries have also taken drastic steps towards implementing a CBDC. Authorities in Sweden for example have been reviewing the viability of a digital krona. The President of the European Central Bank Christine Lagarde also mentioned that the bank was also working on a digital euro.
However, despite all of these efforts by these banks, some of them remain unsure about the project, while some do not even have the authorization to issue a digital currency. 60% of these banks also do not see themselves issuing any digital currency in the short or medium term.
Bitcoin May Breakdown
The manager for the Bank for International Settlements (BIS), Agustin Carstens has warned investors that “Bitcoin may break down” especially as it approaches its total supply. This was made in a speech he delivered for Hoover Institution.
Carstens does not have a pro-Bitcoin view and this is not the first time he has spoken against the leading crypto asset. According to him, the digital asset is a bubble, a Ponzi scheme, and an environmental disaster.