Around 7 undisclosed central banks, representing 20% of the world’s population, are likely to launch central bank digital currencies (CBDCs) in 3 years, a new survey by the Bank for International Settlements (BIS), showed.
While these banks remain unidentified, the BIS claims that having stronger motivations, emerging market economies (EMEs) central banks reported they are more likely to issue a CBDC.
Central banks with firmer plans to launch their own CBDCs are “now imminently close to doing so,” BIS says. Compared to 2018 survey, there’s a noticeable increase in the possibility of a CBDC issuance, but it’s still low compared to some 70% of central banks that are unlikely to issue any type of CBDC in the foreseeable future. 10% of central banks say they are likely to issue a general purpose CBDC in the short term, which is twice as many as in 2018, and 20% in the medium term (1-6 six years).
These results are found in the survey carried out in 2019, where some 66 central banks replied to the question if they work on CBDCs, and if so, what kind and how far they've come. These banks represent 21 advanced economies and 45 EMEs, covering 75% of the world’s population and 90% of its economic output, explains BIS.
The survey further finds that:cash use for payments is declining;innovations and technological advancements are pushing central banks towards considering CBDCs as a complement to or replacement for cash;the research into CBDCs is ongoing, but there is still no widespread expansion of this research into experimentation and pilot arrangements;most central banks are still working to understand the implications for their jurisdiction;sufficiently motivated central banks are moving to pilot designs.
Looking at the greater picture, currently, a few EME central banks plan to issue a CBDC soon and have moved on from research to intensive development, such as developing the operational arrangements for a CBDC, amending laws to allow the central bank to issue such a coin, or piloting projects.
Also, the plans of these banks seem to be speeding up, and more banks overall are or will be involved with CBDC, compared to 2018, finds the survey:80% of central banks (up from 70% in 2018) have some CBDC-related work;half are considering both wholesale and general purpose CBDCs; 40% of central banks have progressed from conceptual research to experiments or proofs-of-concept; 10% have developed pilot projects; central banks that have progressed to development or a pilot project are all EME institutions. Stablecoins ahead of cryptocurrencies
When it comes to cryptocurrency, the 2019 survey results bring nothing new to the table compared to its 2018 counterpart: no central banks reported a significant or wider public use of cryptos for domestic or cross-border payments. However, some 60% of central banks are looking into the impact of monetary and financial stability of stablecoins. Still, the report notes that stablecoins pose a number of risks, particularly when available globally.Watch the latest reports by Block TV.
Currently, many central banks are not analyzing the potential impact of private digital tokens, concludes the report, and the collaboration on understanding that impact may need to intensify. “Stablecoins could find widespread adoption where cryptocurrencies have failed,” says BIS, adding that the survey “shows that more central banks could be looking at the risks outside the financial system while also exploring ways to improve the system with CBDCs.”
Meanwhile, we've seen that people are increasingly looking for faster and more convenient payments options. Also, a study by the central bank of Lithuania in December last year concluded that: "Single-jurisdictional level initiatives are not capable of meeting a global citizens’ need for a safe, trustworthy, and cost-efficient instrument for cross-border payments." However, "modern-day technology seems to be able to address this need. […] The issue, including the idea of multicurrency CBDC deserves deep joint analysis." Also, this week, thinkers at the World Economic Forum published what they call a CBDC “walkthrough” for bankers and governments looking to launch digital fiats in the near future.