By Michael Scott
A recent report by the Bank for International Settlements (BIS) reports that 94% of central banks are exploring wholesale CBDC. The BIS observed that the central banks are likely to favor issuing wholesale over retail CBDC by 2030.
The BIS observed a significant difference among the banks exploring Central Bank Digital Currency (CBDC). The majority are ditching the issuance of retail CBDC.
Central Banks Pursue Wholesale CBDC
BIS considers wholesale CBDC attractive to many given its use to execute transactions between financial institutions and banks. In contrast, retail CBDC is used by the general public to settle typical purchase settlements such as cups of coffee.
The adoption of wholesale CBDC yields massive relief to the market participants who have vocally opposed retail CBDC as extending authoritarian outreach.
The BIS survey, conducted from October last year to January this year, attracted 86 central banks. The report illustrates that stablecoin utilization is restricted within the crypto ecosystem.
The BIS report illustrated that two-thirds of surveyed central banks have jurisdictions working on or implementing a framework for regulating stablecoins and crypto assets.
The stablecoins segment harbors high potential, though its market value currently approximates $162 billion. According to DefiLlama, this represents a $32 billion increment since the beginning of this year.
The BIS reports that the central banks mulling retail CBDCs issuance have over half considering safeguards. The central banks admitted contemplating restricting limits besides other features such as zero remuneration, interoperability, and offline options.
CBDC Becomes a Political Issue
CBDCs are highly contested and currently a political issue. The latter is inevitable as the US presidential elections approach the November 4 poll dates.
The Republican president, Donald Trump, recently drummed up support for Bitcoin mining in the US. The former president termed Bitcoin as the last defense line against CBDC.
The presumptive Republican candidate declared that he would restrict the central bank digital coin once re-elected. In his New Hampshire campaign speech, he described CBDC as a dangerous threat to financial freedom.
Trump vowed to safeguard Americans from government tyranny, particularly by terminating the CBDC creation. He described CBDC as offering the federal government absolute control over citizens’ money.
The former president met with Bitcoin miners, urging them to embark on Bitcoin made in the US. The pronouncement was featured in the alt-tech social media, Truth Social, following the session with Bitcoin Magazine chief David Bailey alongside executives from listed mining firms, including Marathon Digital (MARA), Riot Platforms (RIOT), and CleanSpark (CLSK).
Trump’s vow towards Bitcoin portrays an appeal to the US crypto community as the 2024 presidential poll date heads to the final stretch.
Pro-CBDC Stance Challenged
Trump failed to clarify the stance on how scaling Bitcoin mining protects US citizens against the central bank from issuing the CBDC.
Trump’s opposition to CBDC aligns with Representative Tom Emmer, who earlier disclosed that the Federal Reserve (Fed) harbors a pro-CBDC agenda. The revelation would see the US House enact legislation in May banning the Fed from CBDC issuance without Congress approval.
A confession last month by Christopher Giancarlo, who previously chaired the US Commodity Futures Trading Commission (CFTC), indicated that crypto, stablecoins, and CBDCs are critical constituents for the global future.