Overwhelming Majority Of World Central Banks Developing CBDC Monetary System
According to a new report from the Bank for International Settlements (BIS), the central bank of central banks so to speak, an overwhelming amount of countries are pursuing by developing their own central bank digital currencies (CBDCs). The report, titled Making headway – Results of the 2022 BIS survey on central bank digital currencies and crypto reveals that a supermajority around the world are exploring the possibility of creating and issuing CBDC.
While most central banks are still in the research phase, several have progressed beyond theoretical exploration and initiated experiments with CBDCs. Notable examples include the Bank of China, the Bank of France, the Central Bank of Jamaica, the Central Bank of Norway, and the Bank of Canada. These institutions have recognized the potential benefits and challenges associated with CBDCs and are actively exploring this new form of digital currency.
The BIS report highlights significant progress made by certain countries in CBDC development, suggesting that within the next decade, approximately 15 retail and 9 wholesale CBDCs could be introduced to the public. This projected growth showcases the rising interest and momentum surrounding central bank digital currencies worldwide.
Altogether, the responses from 86 central banks show that the proportion engaged in some form of CBDC work has risen to 93% and that the work on retail CBDC is more advanced than on wholesale version.
The allure of CBDCs stems from their potential to revolutionize the financial landscape. By leveraging blockchain technology, these digital currencies can offer faster, more secure, and cost-effective payment and transfer capabilities. The digital currency also has the capacity to enhance financial inclusion and bolster the resilience of the monetary system and exert influence on consumer purchasing habits.
Emerging economies, in particular, have shown great enthusiasm for CBDCs, recognizing them as a tool to enhance financial access for the unbanked population. Furthermore, countries like China view them as a response to the challenges posed by cryptocurrencies and stablecoins, which could potentially jeopardize economic stability.
The growing interest in CBDCs has prompted action from prominent central banks. The Bank of England recently indicated the potential issuance of a digital pound in the future, recognizing the significance of digital currencies in the evolving financial landscape.
Additionally, the European Commission unveiled a bill in June aimed at supporting the development of a digital euro, showcasing the commitment of major economies towards exploring CBDCs.
As CBDCs continue to garner attention and evolve, their transformative potential in revolutionizing financial systems and enhancing inclusivity becomes increasingly evident. The development and successful implementation thereof will require close coordination between international banking institutions.
But what is unmistakable is the determination to get there, and with urgency as rising and unsustainable debt levels may necessitate a rapid ushering-in of a new monetary paradigm.
