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LONDON (Reuters) – Central banks representing one-fifth of the world’s population are likely to issue their own digital currencies over the next three years, according to a survey by the Central Bank Coordinating Group of the Bank for International Settlements.
This surge comes as the physical use of cash declines globally and authorities seek to push back the threat to their powers of printing money from bitcoin and big tech efforts. such as Diem, formerly Libra, backed by Facebook.
At the same time, central banks that have considered negative interest rates are wondering if digital money could be used to help implement sweeping policy.
Wednesday’s BIS survey of 65 central banks showed that 86% were exploring the pros and cons of digital currencies, with some possible design tests.
According to the survey, central banks in emerging and developing economies are more likely than those in large economies to issue central bank digital currencies (CBDCs).
The Bahamas became the first country to launch a general-purpose CBDC, known as Sand Dollar, in October.
A number of larger countries have also tested the waters, with China being the most advanced.
A fifth of central banks in major economies that responded to the survey said issuing digital currencies was “possible” in the short to medium term, up from just one last year.
(Graphic: More and more central banks are considering issuing digital currencies 🙂
The People’s Bank of China in August extended a digital renminbi trial to its three largest urban areas, which together have 400 million people.
ECB President Christine Lagarde said last week that her bank was continuing work on a digital euro, that the Swedish E-Krona was making progress and that US Federal Reserve chief Jerome Powell had said that she was running experiments for a digital dollar.
But there are still hurdles to overcome.
The BIS survey showed that more than a quarter of central banks currently lack the authority to issue a CBDC and around 48% remain uncertain. Around 60% believe that they are unlikely to issue any type of digital currency in the short to medium term.
Overall, however, “central banks are entering more advanced stages of CBDC engagement, moving from conceptual research to practical experimentation,” the survey says.
(Graphic: digital currencies of central banks around the world Digital currencies of central banks around the world 🙂
(Chart: Reasons why central banks are interested in digital currencies 🙂
Reporting by Marc Jones; Edited by Catherine Evans
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