BIS Survey Examines Progress of Central Banks Toward Digital Currency
BIS published a paper that presents the results of a survey that asked central banks how their plans are developing in the area of central bank digital currency (CBDC). The survey shows that central banks are undertaking extensive work on CBDCs. Additionally, BIS, along with Bank of Canada, BoE, Bank of Japan, ECB, Central Bank of Sweden, and SNB, has created a group to share experiences as they assess the potential cases for CBDC in their home jurisdictions. The group will share CBDC use cases; economic, functional, and technical design choices, including cross-border interoperability; and knowledge on emerging technologies.
In 2018, BIS and CPMI had asked central banks about their current work on CBDCs, what motivates that work, and how likely they are to issue a CBDC. One year on, the survey has been re-run. This survey gives a global overview of work underway, showing that emerging market economies report stronger motivations and a higher likelihood that they will issue CBDCs. Nearly 66 central banks replied to the survey, with the vast majority taking part for the second time (63 central banks replied to the 2018 survey). The survey was conducted in the later part of 2019, reused the 2018 definitions, and only changed a small number of questions. The survey starts by asking central banks if they work on CBDCs or not; if they do, it further enquires about the type of CBDC and how advanced the work is.
The survey corroborates the findings from last year’s exercise, especially that a wide variety of motivations drive extensive central bank research and experimentation on CBDCs. The survey shows that about 80% of the central banks (up from 70%) are engaging in some sort of work in this area, with half looking at both wholesale and general purpose CBDCs. About 40% of central banks have progressed from conceptual research to experiments or proofs-of-concept while another 10% have developed pilot projects. Every central bank that has progressed to development or a pilot project is an emerging market economy institution. Globally, emerging market economies are moving from conceptual research to intensive practical development, driven by stronger motivations than those of advanced economy central banks. Nonetheless, their plans appear to be accelerating compared with earlier expectations. Motivations for CBDC research continue to be diverse. Nearly 10% of the surveyed central banks are likely to issue a CBDC for general public in the short term.
Collaboration through international vehicles, such as the BIS Innovation Hub, will be necessary to avoid any unforeseen international consequences. The collaboration on understanding the impact of private digital tokens may also need to intensify. Stablecoins could find widespread adoption where crypto-currencies have failed. 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.
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Keywords: International, Banking, CBDC, Fintech, PMI, Digital Currencies, Research, Stablecoins, CBDC Group, Blockchain, CPMI, BIS
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