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According a decrypt report, the number of central banks eager to introduce Central Bank Digital Currencies (CBDCs) in the near future has doubled since last year, demonstrating a growing interest in digital currencies despite the recent turmoil in the crypto market. A recent survey conducted by the Bank for International Settlements (BIS) highlights the concerns surrounding cryptoassets and stablecoins while emphasizing the need for coordinated regulatory approaches to mitigate risks to the financial system.
The BIS survey reveals that nearly a quarter of central banks worldwide are currently piloting retail CBDCs, with over two dozen state-backed digital currencies expected to launch by 2030. CBDCs, similar to stablecoins, are digital versions of a country’s or economic zone’s currency issued by the respective central bank. Several nations, including Nigeria, Jamaica, the Bahamas, and the Eastern Caribbean, have already introduced their own CBDCs.
The survey suggests that this trend will continue, with 15 consumer-facing retail CBDCs and nine wholesale CBDCs anticipated to be launched globally by the end of the decade. These digital currencies will facilitate transactions both within and between financial institutions, supporting economic activities in emerging and established economies.
According to the report, 60% of central banks surveyed indicated that the rise of stablecoins and other cryptoassets has expedited their efforts to develop CBDCs. This growing interest reflects the recognition of the potential advantages and benefits that digital currencies can bring to the financial system.
However, despite this increasing enthusiasm, not all central banks are convinced of the immediate necessity of state-backed digital currencies, despite 93% of central banks currently exploring CBDCs in some capacity. The report identifies a clear divergence, with some central banks becoming more likely to issue a CBDC within the next three years, while others express a decreased inclination to do so.
The BIS report highlights the risks associated with cryptoassets and stablecoins, cautioning that if widely adopted for payments, these digital assets could pose a threat to financial stability. To address these concerns, the Committee on Payments and Market Infrastructures (CPMI), the International Organization of Securities Commissions (IOSCO), the Financial Stability Board (FSB), and the Basel Committee on Banking Supervision (BCBS) have collaborated to publish updated guidelines and standards for stablecoins and crypto activities more broadly.
As central banks worldwide navigate the changing landscape of digital currencies, it is clear that CBDCs have garnered significant attention. While some nations are moving forward with their plans to introduce state-backed digital currencies, others are adopting a more cautious approach. The continued exploration and development of CBDCs, alongside enhanced regulatory frameworks, will shape the future of the global financial system in the years to come.
