Which way CBDCs ? A BIS report.

A recent survey by the Bank for International Settlements (BIS) has found that central banks around the world are increasingly exploring the possibility of issuing central bank digital currencies (CBDCs). The BIS survey, which was conducted in 2023, found that 93% of central banks are currently engaged in CBDC work.

The BIS survey also found that nine central banks are "very likely" to issue wholesale CBDCs for use in financial markets within the next six years. Wholesale CBDCs are designed for use by banks and other financial institutions, while retail CBDCs are designed for use by individuals and businesses.

The BIS survey highlights the significant progress that has been made in global CBDC development in recent years. 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.

Despite the recent volatility in the crypto market, there are a number of reasons why central banks are interested in CBDCs. CBDCs could help to improve financial inclusion, reduce the cost of cross-border payments, and make the financial system more resilient to shocks.

However, there are also a number of challenges that need to be addressed before CBDCs can be widely adopted. These challenges include ensuring the security of CBDCs, protecting user privacy, and preventing money laundering and other financial crimes.

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.

The BIS survey provides valuable insights into the progress and intentions of central banks as they navigate the opportunities and challenges presented by digital currencies. As central banks 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.

BIS report