93% of Banks Working on CBDCs: India, EU, UK, Intently Exploring

Lavina Daryanani
Source: Paytm

Central Bank Digital Currencies, or CBDCs, are touted to be the future of money. Several nations across the world are currently in the research and development phase of their respective nation’s digital monetary variants. A recent survey of 86 banks conducted by the Bank for International Settlements, BIS, pointed out,

“Over the course of 2022, the share of central banks engaged in some form of central
bank digital currency (CBDC) work rose further, to 93%, and their uncertainty about
short-term CBDC issuance is fading.”

As of now, the work on retail CBDCs is “more advanced” when compared to the wholesale counterparts. One out of four central banks revealed that it was piloting a retail CBDC. However, that is not the case with every institution. As reported recently, Hong Kong’s central bank is looking to first proceed with the development of a wholesale CBDC. It is expected to take two to three years to build the wholesale layer. Anyhow, the government has not completely put retail on the backseat.

The HKMA has parallelly started a study to look at the prospect of issuing retail CBDC (rCBDC) in Hong Kong. The ultimate design of the retail layer will be significantly affected by a wide range of factors. In fact, some of them are still not fully articulated and deliberated. Thus, by first focusing on the wholesale layer, the bank intends to develop a technical foundation that can suit different design choices for the retail layer with relatively little modification further down the road.

The BIS survey pointed out that more than 80% of central banks see potential value in having both a retail CBDC and a fast payment system, “mostly because a retail CBDC has specific properties and may offer additional features.”

Also Read: CBDC: Hong Kong Central Bank to Lay Foundations for e-HKD

15 Retail, 9 Wholesale CBDCs will be ready by 2030

At the moment, there are four live retail CBDCs in the world, issued by The Bahamas, the Eastern Caribbean, Jamaica, and Nigeria. Based on other central banks’ responses, the BIS survey pointed out that the numbers could rise by the end of the decade. Several regions have been making steady progress on this front. Towards the end of last quarter, the central bank of the UAE launched its CBDC strategy called “The Digital Dirham.” The BIS report pointed out that major regions including India, the EU, and the U.K. seriously intend to issue a digital version of their fiat currencies. Specifically, the report noted,

“The survey suggests that there could be 15 retail and nine wholesale CBDCs publicly circulating in 2030.”

Source: Bank of International Settlements

Also Read: Would CBDCs eventually lead to the demise of Crypto?