The Bank for International Settlements (BIS) said its recent survey of central banks revealed that 94% of them globally are now engaged in exploring central bank digital currencies (CBDCs) — reflecting a sharp increase in experiments and pilots, especially with wholesale CBDCs.
The findings — detailed in a report titled “Embracing Diversity, Advancing Together” — indicated that central banks are proceeding with caution and taking diverse approaches to CBDC implementation and design.
The survey also found that central banks are motivated to explore CBDCs, with a key focus on preserving the role of central bank money amid the rise of privately issued digital currencies. Additionally, enhancing domestic payment efficiency, promoting financial inclusion, and improving cross-border payment systems are other significant drivers.
The watchdog’s survey highlights the accelerating interest and efforts among central banks in developing CBDCs, with a clear trend towards wholesale applications.
Wholesale CBDCs gain momentum
The survey, which gathered responses from 86 central banks, revealed a significant rise in wholesale CBDC projects, particularly in advanced economies.
The likelihood of issuing a wholesale CBDC within the next six years now surpasses that of issuing a retail CBDC. Central banks have been enhancing their engagement with stakeholders to refine CBDC designs, focusing on features such as interoperability and programmability for wholesale CBDCs.
For retail CBDCs, more than half of the surveyed central banks are considering incorporating holding limits, interoperability with existing payment systems, offline transaction capabilities, and zero remuneration.
Differences in design preferences between advanced economies and emerging markets are evident, with the latter showing a greater inclination towards distributed ledger technology (DLT) and transaction limits.
The BIS emphasized the importance of global cooperation to ensure a safe and efficient payment system as jurisdictions advance at different paces and adopt varied approaches.
Stablecoin use limited outside crypto
The survey also explored the use of stablecoins and other digital assets. It found that stablecoins are seldom used for payments beyond the crypto ecosystem.
Despite the overall stablecoin market capitalization surging above $161 billion at the end of May 2024, the fiat-pegged tokens constitute only 6% of the total crypto market.
Central banks observed that stablecoins are primarily used for crypto trading or within DeFi platforms, with minimal adoption for mainstream payment purposes.
Central banks reported that stablecoins are mainly used by niche groups for remittances and retail payments rather than by the wider public. For example, stablecoins account for about 5% of remittances to Mexico.
Despite this limited use, the potential for stablecoins to disrupt financial stability and payment systems remains a concern, driving regulatory efforts. The primary regulatory objectives include protecting investors and consumers, ensuring financial stability, and countering illicit activities.
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