RBI Allows Use of Ratings from New CRISIL Entity Under Basel Rules
BIS published a report that presents the results of a survey among more than 60 central banks in late 2020 about their engagement in central bank digital currency (CBDC) work, their motivations, and their intentions regarding CBDC issuance. The central banks also provided their views on the legal framework for CBDC and their assessment of the use of cryptocurrencies and stablecoins in their jurisdictions. The survey revealed that central banks are progressing from conceptual research to practical experimentation. Although most central banks do not have plans to launch digital currencies in the foreseeable future, central banks collectively representing a fifth of the world's population are likely to launch retail CBDCs in the next three years.
The survey showed that nearly 86% of the central banks are exploring the benefits and drawbacks of CBDCs. About 60% of the central banks indicated that the crisis has not changed their priority or preference for issuing a CBDC. For the central banks that have altered their stance on CBDC due to the COVID-19 crisis, main reasons are the goal of enabling access to central bank money during times of emergency and the use of CBDC as a potential complement to cash and in-person payment methods when social distancing is required. The notion of using CBDC as a means of government-to person payment, notably direct fiscal assistance or stimulus to households and small businesses, has been also widely shared. Globally, interest in CBDCs continues to be shaped by local circumstances. In emerging market and developing economies, where central banks report relatively stronger motivation, financial inclusion and payments efficiency objectives drive general purpose CBDC work. A testament to these motives is the launch of a first “live” CBDC in the Bahamas. This front-runner is likely to be joined by others.
Despite these developments, the results show that a widespread roll out of CBDCs still seems some way off. Interest and work on CBDCs is global, but motivations for their potential issuance are shaped by local circumstances. Financial inclusion remains a key motivation across emerging market and developing economies and a top priority for CBDC development. In advanced economies, the perceived need for issuance is generally lower and the main areas of interest are related to the efficiency and safety of payments. International policy coordination on CBDCs is set to intensify over the coming years, as central banks thoroughly review the cross-border and economic implications of issuing digital currencies and technical design choices and operational complexities continue to present practical challenges. When it comes to cryptocurrencies, central banks continue to see these as niche products with no widespread use as a means of payment. Conversely, developments in stablecoins are being closely watched, given their potential for rapid adoption by consumers.
Related Links
Keywords: International, Banking, CBDC, Fintech, Regtech, Digital Currency, Stablecoins, Cryptocurrencies, BIS
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
BIS Surveys Central Banks on Issuance of Digital CurrenciesRelated Articles
BoE Consults on Approach to Setting MREL, Publishes Bail-In Guidance
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
EBA Seeks Views on Proportionality Assessment Methodology
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
US Agencies Propose Changes to Call Reports and Instructions
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
PRA Finalizes Rulebook Definition of Higher Paid Material Risk-Taker
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
EBA Examines Asset Encumbrance in Banking Sector
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
EBA Publishes Methodological Guide to Mystery Shopping
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
APRA Issues Update on Capital Reform Policy Settings for Banks
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
CPMI-IOSCO Assess Continuity Planning of Market Infrastructures
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
BoE Announces Changes to Validation Rules for Form BTL
The Bank of England (BoE) published questions and answers (Q&A) on OSCA to BEEDS migration for statistical reporting as well a presentation from the project overview session held with statistical reporters.
BCBS Proposes Changes to Process for Reviewing G-SIB Methodology
The Basel Committee on Banking Supervision (BCBS) is consulting on a technical amendment to the Basel Framework to reflect a new process reviewing the global systemically important bank (G-SIB) assessment methodology.
