According to a new study by the Bank for International Settlements (BIS), central banks are actively researching state-owned cryptocurrencies, and developing countries are initiating their mass release.
According to BIS’s third annual survey of 65 central banks, 86% of respondents said they at least consider the pros and cons of issuing their own digital currencies. Last year this figure was 80%.
According to the survey, 60% of central banks are currently experimenting with government-owned cryptocurrencies. In 2019, only 42% conducted such tests. Central banks in developing countries are promoting the concept of state-owned cryptocurrencies with more enthusiasm and dedication than in advanced economies. Seven out of eight government cryptocurrency projects are emerging markets.
“This research is evidenced by the launch of the first real government cryptocurrency in the Bahamas. Others are likely to join this pioneer. Central banks, which together represent a fifth of the world’s population, are likely to issue general-purpose government cryptocurrencies in the next three years, ”the report said.
According to BIS, it will take several more years for the global adoption of government cryptocurrencies. Many countries are not yet backing up their in-depth concept studies with final deployment plans. Tellingly, half of the Central Banks, which in 2019 said that they would “probably” release the state cryptocurrency in the short term, this year talked about an “opportunity” or “unlikely” release in the near future.
Most central banks are more interested in “retail” government cryptocurrency (consumer and everyday use) than in “wholesale” (system payments, transfers between banks). Some countries that once considered both models are now focusing their research on the retail concept.
The legality of state-owned cryptocurrencies remains an unanswered question among most of the central banks surveyed. 48% of respondents are not sure that they have the right to issue digital currency, and 26% are sure that there is no such right. Recall that recently the International Monetary Fund announced that only 23% of the Central Bank can legally issue state cryptocurrencies. ”
Interestingly, over 40% of respondents said that private cryptocurrencies could have a “good” appeal in cross-border payments. Central banks, especially in emerging markets, have expressed great concern about the threat posed by stablecoins. According to the BIS, more than two-thirds of central banks are studying this issue.
“When it comes to cryptocurrencies, central banks are still not considering their widespread use as a payment instrument,” the report said.
