Central banks worldwide are increasingly embracing the concept of central bank digital currencies (CBDCs), according to a survey report published by the Bank for International Settlements (BIS) on July 10, 2023. The report revealed that 93% of central banks are already engaged in CBDC research, marking a significant shift in attitudes towards digital currencies.
The survey, conducted between October and December 2022, collected data from 86 central banks worldwide. It revealed that more than 50% of central banks are involved in CBDC pilots or trials, with nearly a quarter of them already testing their retail CBDC projects. Additionally, half as many central banks are in the process of developing wholesale CBDCs.
Though the proportion of central banks considering the issuance of a retail CBDC has increased from 15% last year to 18% this year, the majority of central banks (68%) still maintain that they are not prepared to issue a retail CBDC anytime soon.
Currently, CBDCs are only in use in a few locations, such as the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria. However, based on responses from central bankers, the study predicted that by the end of the current decade, there will be 15 operational retail CBDCs and 9 operational wholesale CBDCs globally.
Notably, the Reserve Bank of India (RBI) has announced its plans to expand its pilot program for the Central Bank Digital Currency (CBDC) in the 2023–2024 fiscal year. The Indian Central Bank revealed this in its fiscal year 2022–2023 annual report. The bank noted that it intends to enhance the CBDC by incorporating a wider array of use cases and functionalities.
In addition, the Federal Reserve Bank of New York’s Innovation Center (NYIC) announced that it has completed a proof-of-concept for a regulated liability network for CBDCs. This achievement underscores the NYIC’s progress in developing a secure and regulated infrastructure for a central bank digital currency.
This increasing engagement of central banks in CBDC research and development reflects the evolving landscape of digital currencies. More countries are exploring the potential benefits and implications of implementing CBDCs.
According to the report, emerging markets and developing economies (EMDE) are leading the way in CBDC implementation. These nations are significantly more involved in the development of both retail (29%) and wholesale (16%) CBDCs compared to advanced economies (AE), with respective shares of 18% and 10%.
The report noted that the primary motivations driving CBDC initiatives in both developing and established nations are financial stability and improved cross-border payments. However, EMDEs also have a strong focus on enhancing financial inclusion.
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