Most central banks are exploring central bank digital currencies (CBDCs). And according to the Bank of International Settlements, more than half of them are conducting concrete experiments or working on a pilot. The BIS central bank digital currency survey reported that 15 retail and nine wholesale CBDCs are expected by 2030.

More than nine out of 10 central banks engage with other stakeholders when designing proofs of concept, pilots or live CBDCs. The degree of that engagement and the type of entities involved differ between emerging market and developing economies and advanced economies. They also differ by type of CBDC and the stage of work.

In addition, the BIS reported that most central banks see potential value in having both a retail CBDC and a fast payment system. The survey noted that, to date, stablecoins and other cryptoassets are rarely used for payments outside the crypto ecosystem.

Some 60% of surveyed central banks reported that they have stepped up their CBDC work in response to the emergence of cryptoassets.

Open collaboration will be key: R3

Alisa DiCaprio, Chief Economist at R3 said: “Today’s financial system continues to face challenges without innovation using the correct technologies – expensive and slow settlement, siloed systems and an overreliance on account-to-account transfer that could heighten credit risks.

“These are all issues that CBDCs can help overcome by enabling faster and more efficient liquidity management. It’s therefore unsurprising to see central banks continue to ramp up their digital currency exploration.

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“Despite the rapid pace of progress, there are still many questions around CBDC issuance that are still being explored – particularly around smart regulation and privacy. Open collaboration between central banks, regulators and technology providers across public and private sectors will be key in ensuring a carefully thought-out and solid design process that delivers resilience, interoperability, and privacy.”