CBDC Popularity Soars: 93% of Central Banks Engaged, BIS Study Finds

According to a recent study conducted by the Bank for International Settlements (BIS), there has been a notable increase in the popularity of central bank digital currencies (CBDCs), reports Pay Space Magazine. The study revealed that 93% of central banks are currently involved in CBDC projects, indicating a growing interest in virtual currencies. Furthermore, the survey results showed a decline in uncertainty regarding the short-term issuance of next-generation digital currencies.

The BIS predicts that if current trends persist, there will be 15 retail CBDCs and 9 wholesale CBDCs in circulation by 2030. Notably, progress in the development of retail CBDCs has outpaced that of wholesale CBDCs. Wholesale CBDCs offer financial institutions access to new functionalities through tokenization, such as programmability and composability.

In the banking sector, tokenized deposits are attracting increasing attention. Deposits of this nature are seen as capable of offering functionality and efficiency similar to stablecoins, according to Sir John Cunliffe, the Deputy Governor of the Bank of England. He believes that bank deposits can compete fully with non-bank payment coins. Financial institutions have the potential to leverage new technologies for banking purposes, as stated by Rob Hunter, the former Deputy General Counsel and Director of Regulatory and Legislative Affairs at The Clearing House (TCH).

BIS reports that four central banks, namely the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria, have already introduced real-time retail CBDCs into everyday use. Although no new retail CBDCs were launched last year, 18% of banks expressed their intention to issue such currencies in the near future, indicating positive prospects. The feasibility of utilizing digital currencies is still being explored by some banks. For instance, the US Federal Reserve recently published research suggesting that the adoption of next-generation currencies could enhance domestic and cross-border payments.

BIS also suggests that the interest in CBDCs may be influenced by recent cryptocurrency market fluctuations, including the situation with FTX, as well as banking sector bankruptcies, such as those of Silicon Valley Bank and Signature Bank. Furthermore, BIS data reveals that 60% of central banks have expedited their work on CBDCs due to the rise of stablecoins and other crypto assets.