Global: Survey Predicts 24 Central Banks to Issue Digital Currencies by 2030, BIS Finds

According to a survey conducted by the Bank for International Settlements (BIS), approximately two dozen central banks from both emerging and advanced economies are expected to introduce digital currencies by the end of the decade.

Central banks worldwide have been exploring the development of digital versions of their currencies for retail use, aiming to prevent the exclusive control of digital payments by the private sector as cash usage continues to decline. Some central banks are also considering wholesale versions of digital currencies for transactions between financial institutions.

The majority of the new Central Bank Digital Currencies (CBDCs) are likely to emerge in the retail space. Eleven central banks may join their peers in the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria, which already have operational digital retail currencies, as per the BIS survey, which included responses from 86 central banks in late 2022.

On the wholesale side, which could enable financial institutions to access new functionalities through tokenization, nine central banks may launch CBDCs, the BIS noted.

The report highlighted that one of the main drivers behind central banks’ focus on wholesale CBDCs is the improvement of cross-border payments.

Several notable developments have taken place in the CBDC space recently. The Swiss National Bank announced its plan to pilot a wholesale CBDC on Switzerland’s digital exchange, while the European Central Bank is progressing with its digital euro pilot ahead of a potential launch in 2028. China has already reached a pilot testing phase involving 260 million individuals, and India and Brazil, two significant emerging economies, plan to launch their digital currencies next year.

The BIS survey also revealed that 93% of the central banks surveyed were engaged in some form of CBDC development, with 60% indicating that the rise of stablecoins and other cryptoassets had expedited their efforts.

While the crypto market has experienced volatility in recent months, including the failure of TerraUSD and the collapse of FTX, these events had limited impact on traditional financial markets. However, they did lead to sell-offs in various cryptoassets.

Around 40% of respondents stated that their central banks or other institutions had recently conducted studies on the usage of stablecoins and other cryptoassets among consumers or businesses. The report noted that if widely adopted for payments, these cryptoassets, including stablecoins, could pose a threat to financial stability.