Central banks collectively representing a fifth of the world’s population say they are likely to issue a general purpose digital currency in the next three years, according to a survey from the Bank for International Settlements.Following up on a survey from last year, BIS quizzed 66 central banks, covering 75% of the world’s population and 90% of its economic output, about their intentions regarding CBDCs.
Some 80% of respondents (up from 70% a year ago) say they are engaged in some form of CBDC work, with half looking at both wholesale and general purpose options. Meanwhile, 40% have moved beyond conceptual research to experiments or proof-of-concepts and 10% have made it to the pilot stage.
The survey reveals a divide between advanced economies and emerging market economies (EMEs): Of the 10% of banks that are at the pilot stage, all are from EMEs. This is partly because these countries have a greater incentive to find a cash alternative that improves financial inclusion and payments efficiency and security.
Although 70% of central banks say it is unlikely that they will issue a CBDC in the foreseeable future, 10% think it is likely they will issue a general purpose option in the short term. With China among the number, this would represent 20% of the global population.
Meanwhile, interest in wholesale CBDCs appears to have cooled: half the central banks that said in 2018 they were likely to issue one in the short term now say they are less likely to do so. As BIS notes, this is consistent with research published by the Bank of Canada and Bank of Thailand which found that DLT faces big challenges to improve on current arrangements.
On non-government backed digital currencies, central banks are seeing no widespread usage. However, with Facebook’s Libra looming, 60% are considering the monetary and financial stability of stablecoins.