The creation of central bank digital currencies (CBDCs) was one of the most notable stories in blockchain and cryptocurrency in 2021, even if CBDCs aren’t always linked to blockchain or decentralized cryptocurrencies.
For each new all-time high in Bitcoin (BTC), Ethereum (ETH), or any other digital currency reached in 2021; it appeared that some central bank would release news of its own CBDC.
It’s true that CBDCs have seen a lot of progress in recent years. More than 85 percent of central banks are working on some project, generally in the form of research, early-stage pilot, and in some cases development of CBDC solutions and even limited deployment.
Lambis Dionysopoulos, Blockchain researcher.
The number of global central banks with the legal authority to issue central bank digital currencies (CBDCs) has risen, according to a new study by the Bank for International Settlements (BIS). The percentage of central banks currently developing a CBDC or conducting a pilot increased from 14% to 26%, as compared to the previous year.
About 62% of central banks are running related tests or proof-of-concept, the study shows. Also, the stage of development for retail CBDCs is greater than that of wholesale CBDCs. Around 20% of central banks are experimenting with or developing a retail CBDC. Moreso, this is twice the proportion of central banks developing or piloting a wholesale CBDC.
On average, 79% of advanced economy central banks noted that the advent of stablecoins and crypto-assets has accelerated their work on CBDCs, compared to 48% from emerging markets and developing countries.
Sanctions on Russia may lead to more nations considering CBDCs
Sanctions imposed on Russia as a result of its war in Ukraine may cause more countries to consider digital variants of their own currencies – known as central bank digital currencies (CBDCs) – as a counterweight to the US dollar’s dominance, according to a former Bank of Japan (BOJ) executive.
The possibility of a “country like China” using sanctions on Russia to boost the usage of its existing digital yuan for cross-border transactions is what one expert believes. According to Hiromi Yamaoka, former head of payment and settlement systems at the Bank of Japan, “a country like China” may see the measures against Russia.
