A recent survey conducted by the Bank for International Settlements (BIS) has indicated that approximately 15 retail central bank digital currencies (CBDCs) could be in circulation worldwide by the end of this decade. The BIS, a Switzerland-based institution representing 63 central banks and 95% of the global economy, also noted that nine central banks are “very likely” to issue wholesale CBDCs for use in financial markets within the next six years.
Out of the 86 central banks surveyed, 93% are currently engaged in CBDC work. Major jurisdictions such as India, the United Kingdom, and the European Union are actively exploring the possibility of issuing digital versions of their fiat currencies. The report stated that nearly 40% of respondents revealed that their central bank or other institutions in their jurisdiction had recently conducted a study on the usage of stablecoins and other crypto assets among consumers or businesses.
On the other hand, the BIS report expressed concern over the potential threat to financial stability if these crypto assets, including stablecoins, are widely adopted for payments. It emphasized the need for caution and regulation in their usage to mitigate risks to the financial system’s stability. As these digital currencies gain popularity, there is increasing scrutiny over their potential implications for financial stability.
Significant Progress in Global CBDC Development
The BIS report highlights the significant progress made in global CBDC development since the previous survey in 2022. The focus has been particularly intense in emerging economies, where CBDCs are viewed as a means to assist unbanked individuals. The report suggests that if retail CBDCs are issued, they are expected to coexist and complement existing domestic payment methods.
The study found that stablecoins and other crypto assets have had limited usage outside of the crypto ecosystem. Popular use cases include cross-border remittances and consumer purchases. The growth of the private crypto market has influenced the enthusiasm among central banks to explore CBDCs. However, the 2022 crypto crash may have tempered some of that enthusiasm, with an increasing number of central banks expressing reluctance to issue CBDCs in the near future.
Several notable developments have occurred in the CBDC landscape. The Bank of England has stated the likelihood of a digital pound in the future, while the European Commission introduced a bill in June to support the foundation of a digital euro. Meanwhile, the U.S. Treasury is currently examining methods to ensure the privacy of digital transactions.
Some countries have already implemented retail CBDCs. The Bahamas, Eastern Caribbean, Jamaica, and Nigeria are among the nations that have successfully adopted CBDCs. However, concerns have been raised regarding the potential for state surveillance associated with pilot programs of the digital yuan in China.
As central banks around the world continue to explore and develop CBDCs, the potential for 15 retail CBDCs to be in circulation by 2030 signals a significant shift in the global financial landscape. The BIS study provides valuable insights into the progress and intentions of central banks as they navigate the opportunities and challenges presented by digital currencies.
