Research by the Bank for international Settlements into central bank thinking on the prospect of issuing bank-backed digital currencies (CBDC) shows growing momentum, with fully 90% of central banks dipping their toes into the water.
In its 2021 survey of the world's central banks, the BIS found that nine out of 10 are actively exploring CBDCs and more than half are now developing them or running concrete experiments.
Both Covid-19 and the emergence of stablecoins and other cryptocurrencies have accelerated the work on CBDCs - especially in advanced economies, where central banks say that financial stability has increased in importance as a motivation for their CBDC involvement.
Globally, more than two thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term.
Compared with last year, the share of central banks currently developing a CBDC or running a pilot almost doubled from 14% to 26%. Also, 62% are conducting experiments or proofs-of-concept.
Behind the scenes, work is also progressing on the preparing the legal foundations for CBDC issuance.
Compared with last year, the share of central banks with a legal authority to issue a CBDC increased from 18% to 26%. In addition, about 10% of jurisdictions are currently changing their laws.
This is in line with the share of banks that said they would to be likely to issue a CBDC in the short term, the BIS notes.