A survey by the Bank For International Settlements (BIS) has found that nine out of 10 of the central banks surveyed are exploring central bank digital currencies (CBDCs), and over 50 percent are actively developing CBDCs or running concrete experiments.
The survey found more central banks were working on retail CBDCs, which are designed for domestic consumer use, compared to wholesale CBDCs, which are designed for institutional uses such as cross-border payments between banks:
Central Bank Interest in CBDCs Increasing Globally
The report, released on May 6 by the BIS Monetary and Economic division, detailed the results of the survey conducted in October-December 2021 which involved 81 central banks, representing 76 percent of the world’s population, including 25 advanced economies.
Key findings include:
- 90 percent of central banks are exploring CDBCs;
- 26 percent are currently running CDBC pilots; and
- more than 60 percent are conducting proof-of-concept work.
The survey also also found the percentage of central banks exploring CDBCs is up from the 2020 figure of 83 percent. BIS suggests that this increase was driven partially by the Covid-19 pandemic and the emergence of stablecoins, particularly in advanced economies.
Retail CBDCs a Priority
In many countries, work on retail CBDCs is more advanced than on wholesale CBDCs, with the report finding that:
Globally, more than two-thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term.2021 BIS survey on CBDCs
That’s not to suggest there’s no enthusiasm for wholesale CBDCs, however, with the report finding that cross-border transfer times and complexity are key drivers of wholesale CBDC development:
“Work on wholesale CBDCs is increasingly driven by reasons related to cross-border payments efficiency,” the survey found. “Central banks consider CBDCs capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.”
In Australia, CBDC exploration is well and truly under way, with the central bank having last September launched Project Dunbar, a multi-CBDC project run in partnership with the central banks of Singapore, Malaysia and South Africa and the BIS. The results of Project Dunbar found that while multi-CBDCs are technically viable, there are significant regulatory and jurisdictional hurdles to overcome.
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