While the figure of central banks likely to issue their own digital currencies does not differ from the 2019 report, there is more interest and activity, according to a new survey from the Bank for International Settlements (BIS).
While the last survey showed central banks representing one-fifth of the world’s population were looking to issue their own digital currencies, no timeline was given. In 2020, a three year horizon was mentioned.
However, 86% are engaged in some sort of central bank digital currency activity, whether that’s research, proofs of concept or pilot development.
The 2020 survey is a progress report focusing not only on central bank digital currencies (CBDCs) but also stable coins and cryptocurrencies.
Overall, the survey said.” Most central banks are now exploring the case for CBDCs in some way and, moving from “purely conceptual research to experimentation and pilot projects. Yet despite these developments, a widespread roll out of CBDCs still seems some way off.”
Breaking it down, the survey found that two-thirds are focused on stable coins, or digital currencies tied in some fashion to fiat currencies like the US. dollar. This work is focused on “studying the impact of stable coins on monetary and financial stability,” it said.
The interest is due to the use of physical cash falling globally and authorities looking to fend off the threat to their core money-printing activities from bitcoin as well as efforts from big technology companies such as Facebook with Diem, formerly known as Libra..
In addition, central banks who have cut interest rates to the bare bones are also exploring whether digital cash could be used to help implement monetary or fiscal policy..
Emerging and developing economy central banks are more likely than their developed countries to issue CBDCs.
The Bahamas became the first country to launch a general purpose CBDC, known as the Sand Dollar, last October.
In general, China is leading the way with the People’s Bank of China expanding a trial of a digital renminbi last August to its three largest urban regions, which together contain 400 million people.
ECB President Christine Lagarde said last week her bank was pushing on with its work on a digital euro while Sweden’s E-Krona is progressing, and U.S. Federal Reserve chief Jerome Powell has said it is carrying out experiments for a digital dollar.
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