A Total Of 24 Central Banks Are Predicted To Have A Digital Currency At The End Of The Decade

JAKARTA - The Central International (BIS) Bank found in a survey published on Monday, July 10, that around twenty-four central banks in developing and developed countries are expected to have digital currencies circulating by the end of the decade.

Central banks around the world have been studying and working on digital versions of their currency for retail use, in order not to leave digital payments to the private sector within a deadline that is rapidly reducing the use of cash. Some are also considering wholesale versions for transactions between financial institutions.

Most of the Central Bank Digital Currency (CBDC) will only appear in the retail sector, where eleven central banks can join their colleagues in the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria, which are already running the retail digital currency directly, according to a BIS survey of 86 central banks conducted by the end of 2022.

On the wholesale side, which in the future can enable financial institutions to access new functionality thanks to tokenization, nine central banks can launch CBDCs, BIS said.

"Increasing cross-border payments is one of the main factors of central bank work in wholesale CBDC," the report's authors wrote.

The Central Bank of Switzerland announced in late June that it would issue a wholesale CBDC on the Swiss digital exchange as part of a trial, while the European Central Bank plans to start its digital euro trial before its possible launch in 2028. Trials in China currently involve 260 million people, and two other major economies, India and Brazil, planning to launch digital currencies next year.

BIS also said that the number of central banks in its surveys involved in CBDC form increased to 93%, with 60% saying the emergence of stablecoins and other crypto assets had accelerated their work.

In the last 18 months, the crypto market has been in turmoil, including TerraUSD's failure, unsecured stablecoins in May 2022, the fall of the FTX crypto exchange in November, and bank bankruptcy such as Silicon Valley Bank and Signature Bank serving crypto providers.

While this development has no major impact on traditional financial markets, it has led to mass sales in various crypto assets.

Nearly 40% of respondents show that their central bank or other agencies in its jurisdiction recently conducted studies on the use of stablecoins and other crypto assets among consumers or businesses, the survey findings show.

"If widely used for payments, crypto assets including stablecoins can pose a threat to financial stability," said the BIS report.