Bank for International Settlements: 90% of central banks are participating in CBDC-related businesses

Nine out of 10 central banks around the world are exploring central bank digital currencies, according to a survey conducted by the Bank for International Settlements (BIS). The survey also found that more central banks are developing or testing retail CBDCs or digital currencies intended for consumer use than wholesale CBDCs intended for banks. BIS is owned by 63 central banks and accounts for 95% of global GDP.

The BIS report, published on Friday, presents the results of a survey of 81 central banks conducted in the fall of 2021. The regions of the participating central banks account for nearly 76 percent of the world's population and 94 percent of global economic output. The 81 banks include: 25 central banks of developed countries and 56 central banks of developing countries. The survey explores the level of involvement of banks in CBDC-related work, as well as their motivations and intentions for issuing CBDC. Fifty-six of these responding banks participated in the 2020 survey, of which 41 are participating for the fourth time. This allows BIS to assess how their views and involvement in issuing CBDCs has changed over time.

Over the past year, the percentage of central banks actively engaged in some form of CBDC-related work has grown to 90%. Survey data show that central banks are particularly interested in retail CBDC: all central banks working on CBDC either focus on both wholesale and retail, or focus only on retail CBDC. A growing number of central banks are in the later stages of exploring community development centres. Compared to last year, the percentage of central banks currently developing community development centers or conducting pilots nearly doubled, from 14% to 26%. Additionally, 62% of banks are running experiments or proofs of concept. The work of retail central banks is at a more advanced stage than that of wholesale central banks. Nearly one in five central banks is developing or testing retail CDCs, double the share of central banks building or piloting wholesale CDCs.

The report concludes that most central banks surveyed are exploring community development centres, and more than half are developing or conducting specific experiments. In particular, CBDC-related work in the retail industry has entered a more advanced stage . Two-thirds of central banks are considering issuing retail CBDCs in the future, joining the Bahamas, China, the Eastern Caribbean and Nigeria, which have already issued CBDCs.

As the issuance of CBDC is gradually moving from research to actual implementation on a global scale, the shape of the future retail CBDC ecosystem may become very clear. A number of central banks are exploring interoperability with existing payment systems and considering involving the private sector. Public and private sector cooperation, coupled with interoperability, will help create an ecosystem where CBDCs coexist with other means of payment.

At present, central banks generally believe that the use of stablecoins is limited to niche groups or specific use cases. However, a considerable number believe that stablecoins have the potential to become a widely used payment method. The survey shows how the emergence of stablecoins and other cryptocurrencies has accelerated global work on issuing CBDCs.

The issue of efficiency in cross-border payments has been brought up several times over the past year, particularly to the central bank's work in issuing wholesale CBDCs. A multi-year G20 initiative is underway to make cross-border payments faster, cheaper, more transparent and more accessible. “CBDC can play an important role in this regard, especially in terms of shortening the current transaction chain and providing longer operation time,” said an industry insider. A report to the G20 in July will further analyze options for interconnecting CBDCs across countries to improve cross-border payments.

Author: Zeqi YI