As the world’s central banks are frequently looking into Central Bank Digital Currency (CBDC) projects, their focus is shifting into more advanced stages of CBDC engagement. As claimed by a new report by the Bank for International Settlements (BIS), with more banks moving from conceptual work to experimentation.
Data presented by the report, entitled Ready, steady, go? – Results of the third BIS survey on central bank digital currency shows that, over the last four years, the share of central banks that actively engaged in CBDC work rose by about one third to a total of 86%. As claimed by the BIS, the central banks that are not included in CBDC primarily hail from smaller jurisdictions. More banks are either attending at both wholesale and retail or narrowing their activities to only retail.
The report stated that,
“Central banks are moving into more advanced stages of CBDC engagement, progressing from conceptual research to experimentation. About 60% of central banks (up from 42% in 2019) are conducting experiments or proofs-of-concept, while 14% are moving forward to development and pilot arrangements.”
The BIS figured that last year was necessary for the CBDCs’ roll-out, as it “marked the arrival of a ‘live’ general purpose CBDC when the Bahamas launched its Sand Dollar for its residents on 20 October 2020.”
The year 2020 surveys collected figures from the report from 65 central banks. According to the bank, respondents account for close to 72% of the global population and 91% of the world’s economic output.
The surveyed countries included both advanced economies (AEs) and emerging market and developing economies (EMDEs).
Interpreting how CBDC projects might vary on a regional basis, the BIS perceives that “[p]ayment-related motivations, such as domestic payments efficiency and payments safety remain at the heart of both AEs and EMDEs’ motivations for issuing general purpose CBDCs.”
This shows that “EMDEs report stronger motivations for issuing CBDC than AEs,” according to the report.
Financial inclusion is deemed to be the main factor driving CBDC projects in emerging and developing economies. Nevertheless, the survey also points that other factors, such as financial stability and monetary policy, have grown, over time, more convincing motivations for CBDC work in those countries.
Establish on the collected answers, the report concluded that regarding “cryptocurrencies, central banks continue to see these as niche products with no widespread use as a means of payment,” but, at the same time, “developments in stablecoins are closely watched given their potential for rapid adoption by consumers.”
Founded in 1930, the BIS says it is jointly owned by the world’s 62 central banks, representing countries that together account for some 95% of the global gross domestic product (GDP). The bank’s head office is located in Basel, Switzerland.
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