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Experts are predicting an avalanche of central bank digital currencies (CBDCs) in the coming years, underscored by the frantic pace of development in the space.

According to a Bank for International Settlements (BIS) report, the number of CBDCs in operation could balloon to 24 before the end of the decade. The BIS notes that the retail CBDCs will be the dominant offering while their wholesale versions will be keen on closing the gap.

The report resulted from an in-depth survey of 86 banking regulators, quizzing them on the nature of their CBDC development. Per the report, over 93% of surveyed central banks have indicated an interest in researching the potential of digital versions of their national currencies.

The BIS notes that among the surveyed firms, central banks from emerging markets and developing economies (EMDE) appear to be leading the pack in CBDC development. Among the lot, NigeriaJamaica, and the Bahamas have already rolled out their CBDCs with varying degrees of success.

Central banks of emerging countries are exploring CBDCs to ensure financial stability and foster financial inclusion while attempting to improve domestic payment efficiency, according to the report.

“All the current live CBDCs are issued in EMDE jurisdictions,” read the report. “Moreover, the share of EMDE central banks piloting a retail (29%) and wholesale (16%) CBDC is almost twice as high as in AEs (Advanced Economies).”

Both classes of countries confirm that they are interested in the cross-border payment functionalities of CBDCs but remain wary of the limitation of operating hours of such systems. Central banks are currently probing for ways to solve the “complexity of compliance checks” and the “length of existing transaction chains.”

Russia has publicly stated that it will launch its digital ruble in 2024 to circumnavigate existing economic sanctions, while China’s digital yuan pilot is at an advanced stage.

Security standards for incoming CBDCs

Last week, the BIS published a framework designed to protect CBDC systems from security breaches. Titled Project Polaris, the BIS urged central banks to adopt a proactive approach hinged on seven cybersecurity pillars.

“Cybersecurity and resilience are essential to underpinning trust in CBDC systems so they work for everyone in society whenever and wherever,” remarked Beju Shah, a leading executive at BIS. “This framework can help guide central banks in their CBDC initiatives.”

Central banks can also benefit from the technical standards contained in the International Monetary Fund’s (IMF) CBDC handbook.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Blockchain provides perfect foundation for CBDC

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