The Rise of Central Bank Digital Currencies (CBDCs)
The Bank for International Settlements (BIS) predicts a significant increase in the number of central bank digital currencies (CBDCs) by the end of the decade. According to a recent survey by the BIS, there may be 15 retail and nine wholesale CBDCs publicly circulating in the near future. Currently, there are already four retail CBDCs in circulation in The Bahamas, the Eastern Caribbean states, Jamaica, and Nigeria.
Key Points:
- Increased interest: The survey reveals a rise in the percentage of central banks likely to issue a retail CBDC in the next three years, from 15% to 18%. The number of banks planning to issue a wholesale CBDC has also increased, with 16% of central banks expecting to do so within the next three years.
- Emerging Markets vs. Advanced Economies: Central banks from Emerging Market and Developing Economies (EMDE) are more likely to issue retail CBDCs compared to Advanced Economies (AE).
- Motivations for CBDC Issuance: The BIS identifies improved financial inclusion and payment efficiency as key motivations for issuing retail CBDCs. Both emerging markets and advanced economies prioritize domestic payment efficiency, payment safety, financial stability, and cross-border payment efficiency.
- Stablecoin Usage: Nearly 30% of central banks report stablecoin use in their jurisdiction, primarily for remittances. However, stablecoins are rarely used for payments outside of the crypto market.
Hot Take:
The BIS survey indicates a growing trend towards the adoption of CBDCs globally. With more central banks expressing interest and a focus on financial inclusion and payment efficiency, CBDCs have the potential to transform the way people transact and access financial services. As the world becomes increasingly digitized, CBDCs could play a crucial role in shaping the future of money.
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