In response to the rapid decrease in cash, central banks all over the world are developing digital versions of their currencies for everyday use to prevent leaving digital payments to the private sector.
By the end of the decade, almost two dozen central banks from both emerging and developed economies, according to the Bank for International Settlements (BIS), plan to have digital currencies in use.
Digital currencies
Eleven central banks will join their counterparts in the Bahamas, the Eastern Caribbean, Jamaica, and Nigeria that already operate active digital retail currencies. The majority of the new Central Bank Digital Currencies (CBDCs) will appear in the retail market.
Nine central banks might introduce CBDCs for the wholesale market, giving financial institutions access to new functions through tokenization.
- Central banks develop digital currencies to combat cash shortages.
- Central banks launch digital retail currencies in the Bahamas, Eastern Caribbean, Jamaica, and Nigeria.
- Crypto market turmoil in 18 months, TerraUSD failure, FTX demise, Silicon Valley bankruptcies.
The Swiss National Bank plans to issue a wholesale CBDC on Switzerland’s digital market as part of a pilot, whilst the European Central Bank is on track to start testing the digital euro before a potential debut in 2028.
260 million people in China have now participated in pilot testing, and two other significant growing economies, India and Brazil, intend to introduce digital currencies the next year.
93% of central banks now participate in CBDC in some capacity, with 60% reporting that the development of stablecoins and other crypto assets has sped up their efforts.
The crypto market has been turbulent over the last 18 months, with the failure of TerraUSD, the demise of the crypto exchange FTX, and the bankruptcies of Silicon Valley Bank and Signature Bank among others.
A survey on the use of stablecoins and other crypto assets among consumers or businesses was recently conducted, according to over 40% of respondents who said their central bank or other institutions in their jurisdiction have done so.
