Central banks accelerate exploration of CBDCs and stablecoins

The Bank for International Settlements (BIS) recently published a report which revealed that 90% of the 81 central banks surveyed are exploring CBDCs and more than a quarter are in the process of developing or running their own pilots.

Central banks across the globe are accelerating their exploration of CBDCs as they look to improve their digital payments and banking infrastructure. From speeding up cross-border payments to ensuring financial stability, CBDCs have potentially wide-ranging benefits and we can expect to see more of them introduced in the foreseeable future.

The report said that two-thirds of central banks are considering the issuance of a retail CBDC (a digital currency designed for consumers) and that the Bahamas, China, Eastern Caribbean and Nigeria may soon be joined by other jurisdictions issuing or piloting a live retail CBDC.


Around 70% of central banks are also looking into the potential impact of stablecoins on monetary and financial stability, while around a quarter are studying the use of cryptocurrencies according to the BIS report.

Central banks have different expectations when it comes to the scalability of stablecoins and whether they would become widely used and accepted as a means of payment, according to the report.  They do seem to favour stablecoins backed by a single currency as a method of payments, over other types of stablecoins pegged to commodities or other cryptocurrencies.

But in recent days even these types of stablecoins have struggled. Tether, the biggest stablecoin, last week briefly broke its one-to-one link with the US dollar dropping to 95.11 cents before recovering. Furthermore, this week Deus Finance’s stablecoin dei (DEI) lost its peg with U.S. dollar and fell to as low as 54 cents.

This has led some, including the Financial Times’ editorial board to call for ‘real world rules’ for stablecoins. It highlighted that defining what crypto assets are and therefore what agency should have oversight is part of the problem, as are countries’ divergent attitudes to crypto. It calls for countries to move in concert and warns that the ‘risk of inaction is that financial stability is threatened by stablecoins’ next, bigger wobble.’

Given the recent turmoil in this space, a move from the BIS, central banks and regulators to provide clarity on the future of these assets would help provide stability and this would be welcomed by both crypto enthusiasts and institutions alike.

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