Central banks, which see the development of cryptocurrencies as a threat to their monetary sovereignty, are rushing to launch their digital currencies. By 2028, 68% of countries could be offering their currencies to retail customers in digital form. Zoom in on this accelerating response to the crypto challenge.
Cryptocurrencies and the pandemic as gas pedals
According to a survey by the Bank for International Settlements (BIS), which polled 81 central banks around the world, the majority acknowledge that the rise of cryptocurrencies and stablecoins in 2021 has played a big role in accelerating the transition to digital currencies.
In total, 68% of countries could launch their own digital currency for consumers by 2028. 1 in 4 countries is likely to do so by 2025, whereas only 1 in 3 imagined taking this step in 2018, with no specific date.
While the development of cryptocurrencies has prompted central banks to step up their digital currency efforts, the Covid-19 pandemic has also played a decisive role for 30% of them, faced with a decline in cash payments.
Banks involved in the implementation of digital currencies
The digital currency project is now at an advanced stage for 1 in 4 central banks.
In Russia, the first digital ruble tests have been postponed until next year due to the war in Ukraine, but the aim remains to launch the digital currency before 2030. In January, China launched an e-Yuan digital wallet, currently in the testing phase. The Eastern Caribbean, Nigeria and the Bahamas have already launched their virtual currencies.
Most countries are making headway on two fronts: the launch of a digital currency for individuals, and a second virtual currency reserved for financial institutions and banks.
7 out of 10 central banks plan to involve banks in the implementation of their project. They would be required to hold and manage the virtual currency portfolios of the general public, as they have the tools that central banks lack, whether for collecting and processing customer data, or for combating fraud and money laundering.