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BIS Confirms Extensive Progress Made on CBDC Development

BIS Confirms Extensive Progress Made on CBDC Development

(10 May 2022 – Europe) Most central banks are now investigating use case for central bank digital currencies (CBDCs), and over one in four are developing pilots according to the Bank for International Settlements (BIS).

The fifth annual report on central bank engagement with CBDC “Gaining momentum Results of the 2021 BIS survey on central bank digital currencies” reveals that among the 81 respondents including jurisdictions such as Australia, India, New Zealand, United Kingdom, United States, Hong Kong SAR, Singapore, Brazil and Spain, progress on retail CBDCs has shifted to an advanced stage. Referencing CBDCs such as the Bahamas’ Sand Dollar and Nigeria’s eNaira that are already live, the report predicts that there are “likely more to come” given that a record share of central banks are “engaged in some form of CBDC work”.

More than two thirds of central banks consider it likely or possible that they will issue a retail CBDC in the short or medium term worldwide. Central banks see the limited operating hours of current payment systems and the length of current transaction chains the most significant pain points of cross-border payments that could be alleviated with CBDCs. Many central banks are considering a role for the private sector, such as customer-facing activities, and are also exploring interoperability with existing payment systems.

“Both COVID-19 and the emergence of so-called Stablecoins and other cryptocurrencies have accelerated 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” the working paper authors Anneke Kosse and Ilaria Mattei states.

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