Over 20% Of Central Banks Are Looking to Launch A CBDC In The Next 1-6 Years: BIS Report
- There’s a growing interest in central banks looking at the possible implementation of digital currency in 2020 than the hype on Bitcoin (BTC), the Bank of International Settlement (BIS) reports.
In research published over the weekend, the Swiss-based BIS reports the growing attention by global central banks on research and development of central bank digital currencies (CBDCs) in 2020. The paper states the motivations, technical developments and policy approaches towards the launch of CBDCs vary across the central banks with the more innovative countries taking a step ahead.
According to the report, there is an increasing consideration of retail CBDCs across the central banks to provide a publicly usable currency while some consider a wholesale CBDC which “could become a new instrument for settlement between financial institutions.”
The comprehensive 39-page research focuses on over 175 central banks and over 16,000 speeches from recent years. The findings of the report state that central banks controlling a fifth of the world’s population are considering to launch a digital currency. Additionally, over 20% of the banks are fast-tracking their CBDC to launch in the next 1-6 years.
The report further reads,
“A full 80% of surveyed central banks are engaging in research, experimentation or development of CBDCs.”
The tipping point
Per the report, the number of speeches positively talking about digital currencies has surged since the end of 2018. As of July 2020, there were more central bank governors speaking positively about retail and wholesale CBDCs than having negative stances.
The tide seems to have switched with the launch of Facebook-led digital currency, Libra, and the global COVID 19 pandemic, the report states.
“A tipping point was the announcement of Facebook’s Libra and the ensuing public sector response.”
As for COVID 19 pandemic role in implementing CBDCs, several governments are accelerating their research and developments on CBDCs to ease payment systems and curb the spread of the virus through cash payments. The U.S. recently enhanced its efforts to offer a digital dollar “as a means of quickly executing government-to-person payments (CARE package), as an alternative to credit transfers and slow and costly cheques.”
These efforts by central banks have seen the public become more attentive to CBDCs over time. In 2020, BIS reports that internet searches across the world for CBDCs are massively overshadowing searches of Facebook’s Libra and Bitcoin (BTC) – which crossed the $12,000 mark earlier this month.
Central banks entering the digital era
As mentioned above, the technical decisions, method of implementation, and reasons for the launch of a CBDC vary across states and countries. According to the BIS report, countries with higher mobile phone usage and higher innovation capacity are associated with a higher likelihood of developing a digital currency.
So far, three countries, China, Sweden, and Canada, have completed tests on a retail CBDC and 13 countries are actively researching on the launch of a wholesale CBDC. Another 18 countries have published reports on the impact and effects of digital currencies on their economies.
BEG reported this July, the Bank of Japan (BoJ) is extending its efforts to launch a CBDC division that will work in cooperation with the U.S. and European governments. The project aims to compete with China’s launch of its digital renminbi (RMB). Other states actively focusing on CBDC include Lithuania, Canada, Cambodia, Thailand, among others.