Central Bank Digital Currencies, or CBDCs, continue to build momentum. A new study by Bank for International Settlements (BIS) confirms more central banks are exploring this option. Whether that will lead to a more stable financial ecosystem, is a different matter.
CBDCs Remain Very Popular
It is not too surprising to see more central banks lean toward issuing CBDC. The new survey by BIS confirms roughly nine in ten central banks actively explore this opportunity. That does not mean they are all building the necessary infrastructure for a CBDC, as a good few of them still need to dedicate more time to research. However, over half are developing CBDCs or running experiments.
External factors, including COVID-19 and the rapid growth of stablecoins, forcing central banks to explore alternative opportunities. Moreover, despite a serious onslaught right now, the cryptocurrency market keeps growing, forcing the hands of institutions looking to establish a CBDC foothold. Financial stability has never been more important, and CBDCs may offer some relief on that front.
On a global scale, two in three central banks consider the migration to a retail CBDC in the next few years. That sends a rather interesting industry signal, confirming the current financial means are unsuitable for this modern world. Whether CBDCs will help establish the equilibrium remains uncertain, as they are still tools to be used and abused by the powers that be. Moreover, more CBDCs are not necessarily a positive development, as the world needs a unified currency more than ever before.
Compared to a similar study last year, the number of central banks with legal authority to issue a CBDC increased from 18% to 26%. Moreover, roughly 10% of jurisdictions will change their laws and regulations regarding central bank digital currencies. Much change is on the horizon in this industry, although nothing has been set in stone yet.