Survey Insights: Central Banks and CBDC Implementation

A recent survey conducted by the Bank of International Settlements (BIS) has unveiled some intriguing insights into the plans of central banks around the world regarding central bank digital currencies (CBDCs). Out of 66 central banks surveyed, covering both advanced economies and emerging market economies (EMEs), only 10% expressed a likelihood to issue a general-purpose CBDC in the near future.

The EME vs. Advanced Economies Divide

The survey results highlight a stark contrast between emerging and advanced economies. A mere 10% of the banks surveyed feel ready to roll out a CBDC swiftly, a figure that’s doubled since the previous year and represents about 20% of the global population. Interestingly, 90% of those contemplating a medium-term CBDC deployment are from EMEs.

Cash: The Driving Force

The report indicates that the use of cash is central to the aspirations of many central banks, especially in EMEs, where there is a strong push to move away from cash dependency. Meanwhile, advanced economies seem to be more concerned with preventing potential accessibility issues for the public.

Motivations Behind CBDC Development

Emerging markets showcase a zeal for CBDC development driven by several factors, including:

• Enhanced payment efficiency
• Improved payment safety
• Financial inclusion

Conversely, advanced economies appear to focus primarily on payment safety as their main motivation for exploring CBDCs.

Wholesale CBDCs: A Similar Narrative

When it comes to wholesale CBDCs, the motivations mirror those for general-purpose CBDCs in EMEs. However, advanced economies prioritize the efficiency of cross-border payments. This nuanced difference suggests that while all central banks are curious about CBDCs, their reasons for pursuing them are influenced by their economic contexts.

Global Collaboration to Understand CBDCs

The quest for understanding CBDCs has led to collaborative efforts. On January 22, the World Economic Forum (WEF) partnered with several leading central banks to create a CBDC policymaker toolkit. This initiative aims to assist policy-makers in assessing the pros and cons of deploying a CBDC, ensuring a well-informed decision-making process.

The toolkit was developed through the cooperation of over 40 institutions, acknowledging that CBDCs can enhance the cost and speed of cross-border interbank payments while reducing risks associated with settlements and counterparties.

Facebook’s Libra: A Catalyst for Change

Interestingly, the former head of payments at the Bank of Japan stated that the advent of Facebook’s Libra initiative significantly motivated central banks worldwide to reconsider their digital currency strategies. The digital currency landscape is swiftly evolving, and central banks are eager to keep pace.