Approximately 70% of the banks surveyed by the Bank for International Settlements (BIS) said they have already started working on a central bank digital currency (CBDC) or they are considering the development of their own virtual currency.
50% Of Banks Surveyed Have Moved To “Proof-of Concept” Stage
The Bank for International Settlements (BIS) is an institution owned by major central banks worldwide and it focuses on providing improved “international monetary and financial cooperation.” There were reportedly a total of 63 banks that participated in BIS’ survey and these institutions represented jurisdictions covering over 80% of the world’s population. The banks responding to the survey account for over 90% of the global economic output.
As mentioned in a report published by BIS, the financial institution’s survey involved conducting conceptual research on the process of creating CBDCs. Several banks worked cooperatively to develop a “common understanding of this new field of study.” Around half, or 50%, of the respondents have now moved to “hands-on” proof-of-concept activities to determine the feasibility and desirability of introducing a CBDC.
IMF Head: CBDCs Are “Safe” And “Cheap”
85% of the banks surveyed by BIS said it is unlikely that they’ll issue their own virtual currency in the short-term, or the next 1-3 years.
As CryptoGlobe reported in mid-November 2018, Christine Lagarde, the head of the International Monetary Fund (IMF), had recommended that all financial insitutitions should consider launching their own digital currency. Lagarde believes blockchain-based currencies are “safe, cheap, and potentially semi-anonymous” and would help in “supplying money to the digital economy.
However, there are many other senior banking and traditional financial market professionals worldwide who think that both CBDCs and decentralized cryptocurrencies may not be beneficial to the world’s financial system. In September 2018, the European Central Bank (ECB) had clarified it was not planning to launch its own CBDC.
Uruguay And Sweden Have Reported Making Considerable Progress In Developing CBDC
As pointed out by the research group at the St. Louis Fed (in December 2018):
Once you add a central bank and remove the “permissionless” network—with nodes that can leave and join as they wish, there isn’t much left to the cryptocurrency you started with.
Despite concerns regarding whether they’re appropriate for a centrally managed financial system, some central banks are still considering exploring the idea of a CBDC. The BIS report revealed that Uruguay’s central bank had been testing out a general purpose CBDC.
Notably, the BIS research report also mentioned that Uruguay and Sweden had made considerable progress in creating their own CBDC and they had also publicly shared most of their findings in order to help banks in other countries.
