- The central banks of EM segment are more interested in digital currencies.
- The private cryptocurrencies are still a no-go in most jurisdictions.
Emerging market economies are more enthusiastic about central bank-issued digital currencies (CBDC), the latest report of the Bank of International Settlements reveals.
Currently, about 80% of central banks around the globe are engaged in either studying or developing CBDC, according to the report published by the Bank of International Settlements, an international financial institution designed to promote and facilitate international monetary and financial cooperation.
The research, based on a survey of 66 central banks both from emerging and developed countries showed that regulators were engaged in testing the idea and considering the risks and benefits of CBDC. Basically, most of them were on the experimental and proof-of-concept stages and only 10% of the respondents confirmed that they proceeded to the intensive development or launched pilot projects.
Notably, this 10% is represented solely by the financial institutions from the emerging economies. The BIS experts noted that EM central banks were more interested and stronger motivated to develop the concept of CBDC than their counterparts in developed countries.
EMEs have generally stronger motivations than advanced economies to work on general-purpose CBDCs (which can act as a substitute or complement to banknotes). Domestic payments efficiency, payments safety, and financial inclusion were, on average, all considered “very important” in this respect for EMEs. For advanced economies, the only motivation ranked as very important was payments safety.
Meanwhile, the overwhelming majority of central banks are still hostile towards any form of private money – digital or not. This attitude has barely changed since the previous report conducted by BIS in 2018. No central bank reported significant public use of cryptocurrencies for domestic or cross-border payments. The majority of respondents pointed put that cryptocurrencies remained a niche thing.
Notably, one central bank whose jurisdiction is facing serious civil unrest admitted that digital currencies were massively used by the general public for cross-border payments. This bank did not participate in the survey of 2018.
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