Basel-based Bank of International Settlement (BIS) released a research report on Wednesday reflecting the stance of global central banks towards digital currencies and stablecoins.
The survey revealed that two-thirds of participating central banks are working on central bank digital currencies (CBDCs) and stablecoins, but much of their research is still in the early stages.
In the BIS study, it received a response from 65 central banks representing 72 percent of the world’s population and 91 percent of the global economic output. The following expressions were used in the research report:
“Most central banks are currently investigating the status of CBDCs in some way, and overall the survey shows that there is a continuous transition from purely conceptual research to experimentation and pilot projects. Still, despite these developments, the widespread launch of CBDCs still seems somewhat wrong. ”
When it comes to CBDC, we can say that the Chinese central bank has surpassed its global counterparts with its ongoing pilot implementation in major cities. While European central banks are also moving fast on digital euro preparations, India is the last country to participate in the currency regulator CBDC race.
However, central banks are still skeptical of digital currencies such as Bitcoin and Ethereum. BIS even referred to the 2020 crypto rally to call this asset class ‘speculative’. In the report, “When it comes to cryptocurrencies, central banks continue to see them as niche products that are not widely used as a payment tool”, followed by the following assessment for stablecoins:
“On the contrary, developments in stablecoins are being followed closely for their potential for rapid adoption by consumers.”
In addition, the central banks of developing countries are driving CBDCs forward with greater effort and purpose than their counterparts in developed economies and cite financial participation and payment efficiency as the most important motivating forces. Seven of the eight CBDC projects currently are in emerging markets.
The legality of the CBDC remains a largely unanswered question among the central banks surveyed. Forty-eight percent of the respondents were not sure they had the authority to issue digital currency, and 26% were sure they did not.
Finally, participants seem determined that private stablecoin arrangements (such as Facebook’s Libra / Diem) are not the driving force behind CBDC projects. Competition from Stablecoin and cryptocurrencies fails to provide them with a compelling CBDC logic.