Central bank digital currency (CBDC) is increasingly becoming an object of interest among financial players from different jurisdictions. According to a recent Bank of International Settlement (BIS) survey, most central banks have shown massive interest in launching their CBDCs and exploring their benefits.
CBDC Sees 93% Interest Among Central Banks
The BIS survey was carried out in October and December 2022 to determine central banks’ perception of centralized digital assets and cryptocurrency in general. The survey results indicated that 93% of central banks strongly desired to delve into CBDCs, retail, wholesale CBDC, or both.
The study further aimed to understand central banks’ goals and objectives regarding their CBDC pursuits. It also seeks to understand the bank’s stance on stablecoin utilization and other crypto assets in their respective countries.
Findings from the survey fundamentally emphasize the growing enthusiasm central banks have toward integrating digital currencies into their monetary frameworks. This highlights the rising acknowledgment by traditional financial systems of the potential advantages of these innovative digital assets.
The BIS survey involved 86 central banks from different jurisdictions. Researchers from BIS noted that the selected jurisdictions represent 82% of the global population and 94% of the world’s economic output.
Among the participants in the survey were 28 central banks from advanced economies, with 58 coming from emerging markets and developing economies. Until last year, a few countries were interested in launching their retail central bank digital currencies.
The Eastern Caribbean, Nigeria, Bahamas, and Jamaica were among these nations. Nonetheless, the survey authors shed light on the increasing number of countries joining the CBDC bandwagon in the future.
The survey outcomes indicated that 18% of central banks intend to introduce a retail CBDC in their jurisdictions within the next few months. Despite not introducing retail digital currencies last year, the survey results reveal the participants’ strong inclination toward developing and launching their retail CBDCs.
Additionally, several central banks are actively considering the adoption of such national digital currencies. Thus, this indicates an imminent expansion in retail CBDCs as many countries acknowledge the potential advantages and opportunities they offer.
CBDC’s Unique Features
Digital currencies have emerged as a revolutionary form of monetary exchange, with central banks’ CBDCs among the available options. CBDCs represent an innovative evolution of national fiat currencies, such as pounds or dollars, but in a digital format issued and regulated by the central banks of various jurisdictions.
What sets CBDCs apart from other digital currencies is the high level of trust many citizens have in them since central banks issue them. Most citizens hold central banks in high esteem and regard them as pillars of authority within a nation’s financial system.
Hence, many residents have confidence in CBDCs. However, they don’t have the same confidence level in other digital currencies because they are not issued by any central bank.
CBDCs’ primary uniqueness lies in their official recognition and endorsement by the government. Unlike decentralized cryptocurrencies that operate independently of any central authority, CBDCs are backed by the central banks of the countries issuing them and such countries’ legal systems.
Furthermore, proponents of CBDCs claim it has an edge over decentralized crypto assets in terms of transparency and accountability. Since they are digital representations of national currencies, CBDC transactions are recorded on secure and immutable distributed ledger systems.
Thus, they enable efficient and traceable financial operations that authorities can track. This transparency enhances the integrity of financial transactions and enables more robust oversight and regulation by financial watchdogs.
Thus, illicit activities such as money laundering and fraud become less rampant. As a result, many trust centralized digital assets like CBDC more than privately-issued tokens like Bitcoin, Ethereum, and others.
Meanwhile, crypto asset proponents, especially BTC advocates, argue otherwise. Hence, time will tell whether CBDCs or privately-issued digital assets will become the future of money.
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