As the cryptocurrency market continues to stay volatile, central banks globally appear undeterred, doubling their efforts to develop their digital currencies or CBDCs. An estimated 24 of these CBDCs are likely to be up and running by the decade’s end, according to a Bank for International Settlements (BIS) report.
These projections mark a significant increase from last year, suggesting that the ongoing volatility in the digital currency market has not hampered the excitement for state-backed digital currencies. A BIS survey suggests the proliferation of crypto assets and stablecoins has influenced 60% of the participating banks to accelerate their CBDC initiatives:
“93% of surveyed central banks are engaged in some form of CBDC work and more than half are running concrete experiments or working on pilots.”
CBDCs offer a digital alternative to a nation’s fiat currency, issued and regulated by the central bank. Countries like Nigeria, the Bahamas, and China have already taken the leap.
They are expected to be joined by a mix of 15 retail CBDCs, serving everyday consumers, and nine wholesale versions designed for interbank transactions by 2030. The BIS report stated that “if issued, retail CBDCs can be expected to complement and coexist with other domestic payment methods.”
However, the surge in interest doesn’t reflect a unanimous global consensus. Despite 93% of central banks considering CBDCs, an increasing number have indicated a reluctance to issue such currencies anytime soon.
The report emphasizes the growing divergence among central banks, with some indicating they are more likely to issue a CBDC within the next three years — even the European Central Bank with its digial euro — while others have indicated less likelihood.
Even as the U.S. government remains undecided on its CBDC strategy, Florida has made its position clear: Outright banning CBDCs and decrying them as a digital form of excessive governmental control.
