In short: Approximately 24 central banks worldwide plan to introduce their own Central Bank Digital Currencies (CBDCs) by 2030, according to a survey by the Bank for International Settlements (BIS). The survey gathered responses from 86 central banks, revealing a growing interest in digital currencies. While only four central banks have launched their own digital currencies so far, 93% of respondents are actively engaged in CBDC-related work. The survey also highlights the acceleration of CBDC development due to the emergence of stablecoins and other crypto assets. Additionally, the survey mentions concerns about stablecoins and their potential impact on financial stability.
Our quick analysis:
In a groundbreaking revelation, the Bank for International Settlements (BIS) unveiled its latest survey, exposing the plans of approximately 24 central banks to step into the world of Central Bank Digital Currencies (CBDCs) by 2030. With responses collected from 86 banks across the globe, this survey sheds light on the growing interest in digital currencies and their potential impact on our global financial systems.
The BIS survey, conducted for the past six years, seeks to understand the motivation and intentions behind central banks' foray into CBDCs, with a special focus on the enhancement of cross-border payments. Though currently, only four central banks have officially launched their own digital currencies, the survey reveals an exponential surge in interest among financial institutions, with a whopping 93% of respondents actively engaged in CBDC-related work.
Interestingly, the survey uncovers that 60% of central banks acknowledged the influence of stablecoins and other crypto assets, which have accelerated their drive to develop CBDCs. These emerging digital contenders have undoubtedly captured the attention of central banks, propelling them to actively explore the potential benefits of CBDCs and their role in shaping the future of economies.
The distinction between retail and wholesale CBDCs becomes evident in the survey findings. Whilst retail CBDCs garnered higher interest, it is intriguing to note that two dozen central banks envision having their own digital currencies in circulation by the end of this decade. Retail CBDCs are set to join the ranks of countries like the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria, which have already implemented live digital retail currencies. Simultaneously, nine central banks plan to introduce wholesale CBDCs, potentially offering financial institutions access to exciting new functionalities through tokenization.
The survey boldly states, "It may be that there will be 15 retail and nine wholesale CBDCs publicly circulating towards the end of this decade," indicating the resounding progress in the adoption of CBDCs.
Notably, CBDC development has witnessed substantial advancement, particularly in emerging economies, where these digital currencies are regarded as a gateway to provide financial access to unbanked individuals. The BIS highlights the high likelihood that if retail CBDCs are introduced, they will seamlessly coexist with existing domestic payment methods, enriching the financial landscape.
Several central banks have made notable strides in CBDC development and testing. The Swiss National Bank plans to pilot a wholesale CBDC on Switzerland's digital exchange, while the European Central Bank aims for a digital euro launch as early as 2028. Similarly, China, India, and Brazil have also voiced their intent to introduce their own digital currencies in the near future.
However, the survey raises concerns surrounding the potential risks posed by stablecoins and crypto assets. The recent volatile incidents in the crypto market, exemplified by the fall of TerraUSD and FTX, along with the bankruptcy of banks serving crypto providers, have amplified these concerns and prompted investor sell-offs.
Acknowledging the gravity of the situation, approximately 40% of the surveyed central banks have undertaken studies to comprehend the implications of stablecoins and other crypto assets on the stability of financial systems. This growing recognition signifies a strong commitment to safeguarding financial stability in the face of a rapidly evolving digital landscape.
As the momentum behind CBDCs gains traction, central banks worldwide are actively exploring their potential implementation, marking a paradigm shift in the global financial ecosystem. These transformative digital currencies hold the power to reshape economies, bolster financial stability, and revolutionize cross-border payments.
The future is on the horizon, and with CBDCs at the helm, we are set to witness a digital revolution of unparalleled proportions.
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Disclaimer: Our articles are NOT financial advice, and we are not financial advisors. Your investments are your own responsibility. Please do your own research and seek advice from a licensed financial advisor beforehand if needed.
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