In a recent survey conducted by the Bank for International Settlements (BIS), a Switzerland-based organization representing 63 central banks and 95% of the global economy, it was revealed that over 90% of central banks worldwide are actively engaged in exploring Central Bank Digital Currencies (CBDCs).
The study, which included responses from 86 central banks, highlights the increasing interest and progress being made in the development of CBDCs. While this represents a significant step towards digital transformation, concerns regarding potential dangers are also emerging.
According to the report, Major jurisdictions such as India, the United Kingdom, and the European Union are among those seriously considering issuing digital versions of their fiat currencies.
Retail CBDCs, which would be available to the general public, are expected to coexist with traditional payment methods. The survey suggests that by the end of this decade, approximately 15 retail CBDCs could be in circulation worldwide.
Additionally, nine central banks have expressed their intention to issue wholesale CBDCs for use in financial markets within the next six years.
One of the significant findings of the survey is that stablecoins and other crypto assets are rarely used for payments outside the crypto ecosystem. Their primary use cases currently revolve around cross-border remittances and consumer purchases.
While progress has been made, the study also reveals that some central banks have become more hesitant about issuing CBDCs in the near term. The increased uncertainty can be attributed, at least in part, to the 2022 crypto plummet, which prompted central banks to reassess their options. Nonetheless, the overall trend indicates a growing shift towards embracing digital currencies.
cbdcS pOSE Threats to Financial Privacy and Economic Freedom
Although the BIS survey reveals a positive outlook for the future, it also calls for caution in addressing potential dangers. As has already been pointed out by multiple institutions, regulators, politicians, and experts, there are several potential threats and risks associated with the implementation of Central Bank Digital Currencies (CBDCs).
One of the most critical dark sides of these government-issued currencies is financial privacy invasion. With the implementation of CBDCs, federal governments will possess the capability to closely monitor all financial transactions of their citizens, raising concerns about the erosion of financial privacy and economic freedom.
Striking a delicate balance between the benefits of CBDCs and the preservation of individual liberties will be vital to ensure a future where digital currencies can coexist harmoniously with privacy rights and personal freedoms.