Bank for International Settlements report reveals strong interest from global central banks in wholesale CBDC

The latest survey by the Bank for International Settlements (BIS) shows that 94% of the world's central banks are actively exploring central bank digital currency (CBDC), especially the development and pilot projects of wholesale CBDC have increased sharply.

The research report shows that central banks are proceeding with caution and taking a diverse approach to the implementation and design of CBDC.

The survey also found that central banks are actively exploring CBDCs, with a focus on preserving the role of central bank currencies amid the rise of privately issued digital currencies. In addition, improving domestic payment efficiency, promoting financial inclusion and improving cross-border payment systems are other important drivers.

This trend is particularly evident in developed economies, reflecting the urgent need for central banks to maintain the monetary role of central banks, improve payment efficiency, promote financial inclusion, and improve cross-border payment systems.

Strong growth in wholesale CBDC projects

The BIS survey collected responses from 86 central banks, and the results showed significant growth in wholesale CBDC projects. The likelihood of issuing wholesale CBDC in the next six years has exceeded that of retail CBDC. At the same time, central banks are strengthening cooperation with stakeholders to improve CBDC design, paying special attention to functions such as interoperability and programmability of wholesale CBDC.

Central banks of various countries are actively exploring CBDC, focusing on maintaining the role of central bank currency in the context of the rise of privately issued digital currencies. Improving domestic payment efficiency, promoting financial inclusion and improving cross-border payment systems are other important drivers.

For retail CBDC, more than half of the central banks surveyed are considering introducing measures such as holding limits, interoperability with existing payment systems, offline transaction capabilities and zero remuneration. There are clear differences in design preferences between developed economies and emerging markets, with emerging markets more inclined to use distributed ledger technology (DLT) and transaction restrictions.

At the same time, the Bank for International Settlements emphasized that global cooperation is crucial to ensure the security and efficiency of payment systems, given that the pace of progress and methods adopted by jurisdictions vary.

The application of stablecoins in mainstream payment fields is limited

The investigation also found that although stablecoin market capitalization has soared to more than $161 billion by the end of May 2024, their payment applications outside the crypto ecosystem are very limited, accounting for only 6% of the entire cryptocurrency market. However, stablecoins are mainly used in cryptocurrency exchanges or DeFi platforms, or have few applications in mainstream payments.

The central bank report also stated that stablecoins are mainly used by niche groups for remittances and retail payments, rather than by the general public. For example, stablecoins account for about 5% of remittances in Mexico.

Despite their limited use, the potential disruption of stablecoins to financial stability and payment systems has aroused concerns from central banks around the world, which in turn has prompted regulatory efforts. Key regulatory objectives include protecting investors and consumers, ensuring financial stability and combating illegal activities.

Conclusion

The Bank for International Settlements report reveals the strong interest of global central banks in CBDC, especially wholesale CBDC, as well as the diverse approaches taken in the design and implementation process. At the same time, the report also pointed out the limitations and regulatory challenges of stablecoins in the mainstream payment field. Within the framework of global cooperation, central banks are working hard to balance innovation and risk to ensure the security, efficiency and inclusiveness of the payment system.

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