9 Out of 10 Central Banks Exploring Digital Currency, BIS Says

Nine out of 10 central banks around the world are exploring central bank digital currencies (CBDC), according to the results of a survey conducted by the Bank for International Settlements (BIS).

The survey also found that more central banks are developing or testing a retail CBDC, which is a digital currency designed to be used by consumers versus a wholesale CBDC, which is meant to be used by banks.

The report published on Friday by BIS, an umbrella group for central banks, presented the results of a survey of 81 central banks conducted in autumn 2021. The survey explored the level of engagement by banks in CBDC work, along with their motivations and intentions concerning CBDC issuance. BIS is owned by 63 central banks that represent about 95% of the world's total GDP.

More than half of the surveyed central banks are developing CBDCs or "running concrete experiments," according to the results. Around 20% are developing or testing a retail CBDC, which is twice the number of central banks working on a wholesale digital currency.

Around the world, central banks are actively exploring CBDCs as economies look to strengthen their digital payments and banking infrastructure. From potentially improving financial inclusion, to speeding up cross-border transfers, CBDCs theoretically hold many promises, but with China taking the lead in developing and testing a digital yuan, some governments around the world are also viewing CBDCs as a play for monetary sovereignty.

In September 2021, BIS signaled central banks around the world to start working on CBDCs. According to the Atlantic Council's CBDC tracker, 87 countries representing over 90% of the global economy are working on CBDCs.

"On average, almost six out of 10 respondent central banks said that this growth has accelerated their work on CBDCs," the report said.

Jurisdictions represented in the BIS survey make up close to 76% of the world’s population with 56 of the surveyed central banks representing emerging and developing economies.

While central banks in the Bahamas, China and Nigeria have already issued or are piloting a retail CBDC, the survey found that other jurisdictions will likely follow with 68% in the "foreseeable future."

In addition to questions about CBDCs, the survey also asked central banks about stablecoins (cryptocurrencies pegged to the value of other assets or currencies like the U.S. dollar) and cryptocurrencies in general.

"Central banks differ in their expectations that stablecoins will scale up and become widely used and accepted as a means of payment, depending on the type of stablecoin," the report said, adding that central banks seem to believe stablecoins backed by a single currency are far more likely to succeed as a method of payment over other types of stablecoins pegged to commodities or other cryptocurrencies.

About 70% of central banks are looking into the potential impact of stablecoins on monetary and financial stability, while around a quarter are studying the use of cryptocurrencies.