cryptocurrencies / gopixa

The advent of central bank digital currencies (CBDCs) is looking increasingly inevitable, with 90% of central banks now exploring the idea, according to the Bank for International Settlements (BIS).

In a new paper, the BIS reported that a survey of 81 central banks found that 90% are examining CBDCs, and more than half of them are currently developing their own CBDC or running experiments in this area.

The work is most advanced on retail CBDCs, and the paper concludes that “more than two-thirds of central banks are likely to issue a retail CBDC in the short or medium term.”

The survey found that the effects of the pandemic, along with the development of stablecoins and other cryptocurrencies, have accelerated the banks’ work on CBDCs, “especially in advanced economies, where central banks say that financial stability has increased in importance as a motivation for their CBDC involvement.”

Additionally, the paper noted that many central banks are exploring interoperability with existing payment systems and the private sector in general.

“Public and private sector collaboration, together with interoperability, would contribute to an ecosystem in which CBDCs coexist with other means of payment,” it said. “This, in turn, might promote adoption and greater competition.”

In terms of wholesale CBDCs, their potential use to improve cross-border payments is the primary motivation, the report suggested.

“An ambitious, multi-year G20 program is underway to make cross-border payments faster and cheaper, as well as more transparent and accessible. CBDCs could play an important role here — according to the respondents especially in terms of shortening current transaction chains and providing longer operating hours,” it said.