More central banks now considering launching digital currencies

Getting your Trinity Audio player ready...

The days when Bitcoin was viewed as Monopoly money are over. As cryptocurrency continues to gain favor and is viewed more seriously as an alternative to paper fiat, a number of countries around the world are considering introducing a central bank digital currency.

It’s already been seen in countries like China, the Marshall Islands, Bermuda and more, and a recent study conducted by the Bank of International Settlements (BIS) reveals that this is only the beginning. More countries, led by their central banks, are beginning to take a hard look at introducing a central bank-created digital currency.

The BIS released its findings in a report last Thursday entitled “Impending arrival – a sequel to the survey on central bank digital currency (in pdf).” In it, researchers have concluded, “The survey corroborates the findings from last year’s exercise, especially that a wide variety of motivations drives extensive central bank research and experimentation on CBDCs. Only a few EME central banks have progressed to intensive development (eg developing the operational arrangements for a CBDC and/or amending laws to allow the central bank to issue one) or pilot projects and have firm intentions to issue a CBDC soon. Nonetheless, their plans appear to be accelerating compared with earlier expectations.”

In total, 80% of those surveyed acknowledged that a digital currency project was in the works, and half of these are past the initial casual conversational stage.

The report adds, “Some 40% of central banks have progressed from conceptual research to experiments, or proofs-of-concept; and another 10% have developed pilot projects… Every central bank that has progressed to development or a pilot project is an EME institution.”

One of the countries said to be taking the idea seriously is Japan. According to Reuters, a group of lawmakers in the country has begun work on a proposal that would see a Japanese central bank digital currency brought to use, most likely through an initiative between the government and private entities.

According to Japan’s Vice Minister for Foreign Affairs, Norihiro Nakayama, “The first step would be to look into the idea of issuing a digital yen. China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts.”

That possibility follows a recent decision by Japan’s ruling government to team up with six other countries, through their own central banks, to discuss the viability of a multi-state government-offered crypto. However, any tangible results are still a long way off. 

Takehide Kiuchi, a former board member of Japan’s central bank, said, “The BOJ probably won’t want to do anything that would stifle private-sector innovation. The best way could be to issue a hybrid-type digital currency that is operated and issued by private firms, with the central bank’s involvement.” However, recent comments by the current governor of Japan’s central bank, Haruhiko Kuroda, would indicate that there is still no “public demand” for a state-backed digital currency.