The latest survey by the Bank for International Settlements (BIS) reveals that an overwhelming 94% of central banks are exploring the potential of central bank digital currencies (CBDCs). The 2023 report, titled “Embracing Diversity, Advancing Together,” gathered insights from 86 central banks on their involvement in CBDC and cryptocurrency initiatives.

Increasing Focus on Wholesale CBDCs

The survey indicates a significant rise in experiments and pilot projects involving wholesale CBDCs, especially in advanced economies. Emerging markets and developing economies are also stepping up their efforts in this domain. The BIS report suggests that the likelihood of central banks issuing a wholesale CBDC within the next six years now surpasses the likelihood of issuing a retail CBDC.

Diverse Approaches and Design Considerations

Central banks are proceeding at varying speeds, adopting diverse approaches, and considering different design features for CBDCs. The BIS report highlights that many central banks are enhancing their engagement with stakeholders to inform CBDC design, although many remain undecided on specific features.

For wholesale CBDCs, interoperability and programmability are key considerations. In contrast, retail CBDCs are being evaluated for holding limits, interoperability, offline capabilities, and zero remuneration. These features are crucial in ensuring that CBDCs meet the needs of various stakeholders and function effectively within existing financial systems.

Global Efforts to Modernise Financial Systems

The BIS survey underscores the global momentum towards modernizing financial systems through the exploration of CBDCs. Central banks are keen to understand the potential benefits and challenges associated with digital currencies, aiming to enhance financial inclusion, increase transaction efficiency, and improve the resilience of payment systems.