Central Bank digital currencies (CBDCs) enter the “advanced stages” of engagement as nations around the world seek to capitalize on blockchain technology, according to a new report from the Bank for International Settlements.
In its latest survey on CBDC development, the BIS shows that central banks, which represent around one fifth of the world’s population, will introduce a “general purpose CBDC” in the next three years.
The 23-page document is based on primary consultations with more than 60 monetary authorities that took place in late 2020.
The survey shows that 86% of global central banks are actively researching CBDCs. While the majority are unlikely to be issuing digital currency anytime soon, a sizable minority is moving forward.
Around 60% of central banks are experimenting with digital currencies, while 14% are driving development and pilot programs.
“Around the globe, interest in CBDCs continues to be shaped by local conditions,” say the authors Codruta Boar and Andreas Wherli. “In emerging and developing countries, where central banks are reporting relatively stronger motivations, the goals of financial inclusion and payment efficiency are driving general CBDC work.”
The US Federal Reserve is one of the monetary authorities actively involved in CBDCs. Fed economists examine what is known as the “intrinsic value” of the digital dollar and have published several research papers on the subject.
The BIS authors conclude:
“Most central banks are currently investigating the case of CBDCs in some way, and overall the survey shows a steady transition from purely conceptual research to experimentation and pilot projects. Despite these developments, widespread adoption of CBDCs still seems a long way off. ”
In prepared comments published with the report, BIS Director General Agustin Carstens said that CBDCs “can serve as a basis for well-functioning payments” but only in conjunction with “good law enforcement agencies”. Anonymous tokens “don’t fly,” he said.
Carsten stated that unidentified CBDCs would heighten money laundering concerns, undermine efforts to promote financial inclusion and contribute to cross-border instability.
He continued:
“If properly designed and widely adopted, CBDCs could become a complementary means of payment addressing specific use cases and market failures. They could act as a catalyst for continued innovation and competition in payments, finance and commerce as a whole.”
The BIS is commonly referred to as the “bank for central banks” and promotes monetary and financial stability as well as international cooperation between global central banks. Founded in 1930 and headquartered in Basel, Switzerland, the company has expanded its mandate over the decades to include emergency financing for governments in trouble.
As Cointelegraph reported last week, the BIS is currently working on a CBDC settlement platform. Early phase trials are scheduled to begin this year.
