BIS Says 90% of Central Banks Are Exploring CBDC

​The BIS (Bank for International Settlements) has published the results of its latest survey of 81 central banks, showing that more than two thirds are likely to or might possibly issue a retail CBDC in the short or medium term.

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The survey was conducted in autumn 2021, to explore the level of engagement by banks in CBDC work, along with their motivations and intentions concerning CBDC issuance.

The report says central banks are actively exploring CBDCs to strengthen their digital payments and banking infrastructure, improve financial inclusion, speed up cross-border transfers, and enhance their monetary sovereignty.

Central banks are also looking to address frictions such as fragmented data formats, complexity of compliance checks, limited operating hours, unclear foreign exchange rates, as well as legacy technologies, long transaction chains, funding costs and weak competition.

The survey found that 9 of 10 central banks are exploring the possibility of creating their own digital currencies, with over a quarter already developing or running concrete CBDC pilots. More than three quarters of central banks working on a retail CBDC are said to be exploring interoperability with existing payment systems.

The report says almost six out of 10 respondent central banks said the emergence of cryptocurrencies has accelerated their CBDC work.

A rising number of central banks have the legal authority to issue a CBDC, compared with last year's survey. The share of central banks with such a legal authority increased from 18 percent to 26 percent, with about 10 percent of jurisdictions currently changing their laws. "Thus, more than a third of central banks will soon have legal authority to launch a CBDC," the report says.

Central banks in the Bahamas, China, Eastern Caribbean Currency Union and Nigeria have already issued or are piloting a live CBDC for retail use.

The survey also asked central banks about stablecoins and cryptocurrencies. Central banks were found to differ in their expectations that stablecoins will scale up and become widely used and accepted as a means of payment, depending on the type of stablecoin.

Central banks were also found to believe that stablecoins backed by a single currency are far more likely to succeed as a method of payment over other types of stablecoins, i.e. those pegged to commodities or other cryptocurrencies.

About 70 percent of central banks are looking into the potential impact of stablecoins on monetary and financial stability, while around a quarter are studying the use of cryptocurrencies.