A fresh survey conducted by the Bank of International Settlements (BIS) projects that there will be 15 retail and nine wholesale Central Bank Digital Currencies (CBDCs) by 2030.
The study delved into the operations of 86 central banks, examining their involvement and approach toward digital currencies. It encompassed various aspects, including the advancement of central banks in creating retail and wholesale CBDCs, the reasons behind their CBDC issuance, the legal jurisdiction for issuing CBDCs, partnerships with other entities, and the differentiation between retail CBDCs and fast payment systems.
Notably, the survey revealed a substantial surge in interest from central banks, with a 93% growth observed in 2022.
Collaboration with private sector
According to the survey, most central banks intend to collaborate with the private sector to issue their digital currency.
“The survey shows that 87% of central banks engaged in some form of CBDC work are considering using private intermediaries,” the report said.
“Where most central banks see a role for the private sector is in the onboarding of clients, including the execution of know-your-customer (KYC) and anti-money laundering/combating the financing of terrorism (AML/CFT) procedures, and the provision of wallets, user interfaces and other front-end customer services.”
Central banks are already exploring this route lately. BIS and Bank of England (BoE) recently partnered with Quant in its project dubbed ‘Project Rosalinda’. The project aimed to develop prototypes for an application programming interface (API) which will enable a central bank ledger to interact with private sector service providers to facilitate retail payments.
As part of the partnership, Quant was tasked with the responsibility of developing the API functionalities for seamless programmability with the private sector.
Another recent instance of collaborations between central banks and the private sector in the push for CBDCs is that of the Central Bank of Colombia and Ripple.
Banco de la República partnered with Ripple and Peersyst to explore the use of blockchain technology in its payment systems. The project will make use of Ripple’s technologies – Ripple CBDC and its open source blockchain, XRP Ledger to achieve this. At the time of announcement, the project was already in its third phase.
The rise in CBDCs’ popularity is underscored by these partnerships, and one that could further propel its widespread adoption is the development of a digital euro. The European Commission recently proposed a framework that will facilitate its development under the European Central Bank’s jurisdiction. Per the proposal, the digital euro will provide individuals and businesses with an alternative.
