BIS Surveys Central Banks on Issuance of Digital Currencies
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.
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Keywords: International, Banking, CBDC, Fintech, Regtech, Digital Currency, Stablecoins, Cryptocurrencies, BIS
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