The enthusiasm surrounding Central Bank Digital Currencies (CBDCs) was perhaps the biggest story in the crypto space last year. A new report shows just how much these assets have caught on and the prospects of a truly digital financial future.
Almost Everyone’s on the Bandwagon
In a new press release, the Bank of International Settlements (BIS) explained that more central banks are looking into the prospect of launching CBDCs. The report was based on a survey of 65 central banks, which regulated the financial activities of 71 percent of the world’s population and handled 91 percent of the planet’s global output.
As the BIS reported, two-thirds of the participants are indeed studying CBDCs, although most of their findings are still in their early stages. While most smaller central banks have launched iterations of their CBDCs to the public, those of larger economies are taking more time to study these assets’ impacts on their countries.
For now, it is unclear when the mass rollout will happen. Several countries have claimed that their studies could take up to three years. As the BIS explained:
“Most central banks are now exploring the case for CBDCs in some way and, overall, the survey indicates a continuous move from purely conceptual research to experimentation and pilot projects. Yet despite these developments, a widespread rollout of CBDCs still seems some way off.”
The BIS pointed out rightly that China is leading the way in CBDC development. The economic superpower is already working on a rollout plan and has deployed no less than four pilot programs for its proposed digital yuan. With participation from some of its largest financial institutions and technology firms, the digital yuan could very well be China’s most ambitious and encompassing financial project in a generation.
Many have also discussed the possibility of the asset propelling China past the United States in economic power and knocking the dollar off its perch as the global reserve asset. With the United States not having any concrete CBDC plans of its own, this is a present possibility. However, time will tell.
The BIS’s Settlement Program
The BIS isn’t missing out on the CBDC craze as well. Last week, the bank’s Innovation Hub published its annual work program, where it outlined plans for a possible CBDC settlement platform.
As the work program explained, the BIS plans to test the possibility of faster and cheaper cross-border payments using CBDCs. The Innovation Hub will also test prototypes of “tiered retail CBDC distribution architectures” and distributed ledgers to issue “tokenized green bonds to retail investors.”
All initiatives will be driven by branches of the Innovation Hub in Singapore, Hong Kong, and Switzerland. They will also receive input from several central banks.