The Bank for International Settlements (BIS) warns that the widespread use of cryptocurrencies and stablecoins as payment may trigger financial instability. The survey shows that 24 central banks are interested in launching central bank digital currency (CBDC), targeting consumer-facing retail and wholesale by 2030.
The findings reveal that the number of central banks intending to launch CBDCs has doubled since 2022. The trend shows a remarkable recovery from the crypto meltdown characterized by the FTX collapse and prolonged crypto winter. The increase in countries unveiling CBDCs shows improved trust in the digital currency despite the calamity of the crypto market in 2022.
Widespread Crypto and Stablecoin Adoption Could Trigger Financial Instability
The BIS survey shows that the widespread use of cryptos for settling payments would disrupt financial stability. The findings indicate a need to embrace the crypto-oriented standards that CPMI, IOSCO, BCBS, and FSB captured in their updated publications. BIS considers the guidance critical to resolving the risks posed to the financial system.
Standardizing the approach to stablecoins and broad crypto activities is critical, considering that 25% of the global central banks plan to pilot their retail CBDC projects. Proactive preparedness is essential, as BIS observed that over 24 countries would roll out their state-backed digital currencies by 2030.
BIS survey considered CBDCs to represent all digitally supported currency issued within a nation and international economic zone by the respective central bank. The survey observed that several countries have issued CBDCs resembling stablecoins. The report identified Nigeria, the Bahamas, Eastern Caribbean, and Jamaica as leading the pioneer states that have already issued CBDCs.
Central Banks Portray Divergent Response to Adverse Experiences of 2022 Crypto Crisis
BIS report held that the CBDCs seek to replicate stablecoins in functionality though the latter are privately issued and value pegged to fiat currency. The Monday, July 10 report shows that the list of countries unveiling CBDCs will increase. In particular, 15 countries plan to introduce consumer-oriented CBDCs, with another nine targeting the wholesale segment in emerging and developed economies. The wholesale CBDCs target to facilitate payment settlement among financial institutions.
The BIS reports that 60% of central banks participating in the study acknowledge that the proliferation of stablecoins is accelerating existing CBDCs projects. Similar findings were observed on the crypto uptake inspiring the countries to expedite CBDCs projects.
The BIS survey acknowledged that the calamitous crypto cycle did not convince all central banks to initiate the state-backed digital currencies. Although 93% of central banks admit investigating CBDCs, an increasing number confess they desire to delay digital currency issuance.
Mixed Outcome in CBDCs Implementation
The BIS survey findings portray a mixed bag that diverges from the 2022 results. In particular, the Monday report shows that some central banks will likely unveil their CBDCs by 2026. Another set of central banks is likely to avoid the global rush to CBDCs.
The BIS report cites the United States as leading countries determined to delay the CBDCs launch. BIS observations echo the communication released by the US Treasury official in June that the department is yet to determine CBDC pursuit.
Florida State had in May prohibited CBDCs in its territory. The state issued the ban, terming CBDCs innovation as representing Big Brother’s digital dollar.
SureTradeGroup.com is not responsible for the content, accuracy, quality, advertising, products or any other content posted on the site. Some of the content on this site is paid content that is not written or posted by our writers or editors and the opinions expressed do not reflect the opinions of this website. Any disagreement you may have with brands or companies mentioned in articles will need to be taken care of directly with those specific brands and companies. The responsibility of anyone who may click links in our articles and ultimately sign up for that product or service is their own. Forex, Stocks, Cryptocurrencies, NFTs and Dogital Tokens are all a high-risk asset, investing in them can lead to losses. Readers should do their own research before taking any action.