© picture alliance / Rolf Haid

Most central banks have no plans to issue a central bank digital currency (CBDC) in the short or medium term, according to a study recently published by the Bank for International Settlements (BIS). The study found that numerous central banks have explored the topic though research projects and have moved on from conceptual studies to experiments and proof-of-concept activities in many cases. “Only a limited number of central banks are proceeding to the pilot stage with CBDCs, and even fewer see issuance of a CBDC as likely in the short or medium term,” the study revealed.

The authors of the study, Christian Barontini and Henry Holden, carried out a survey gathering the views and experiences of 63 central banks in total, including the Bundesbank. According to the survey responses, only five central banks have already launched pilot projects, one example being Uruguay's e-Peso. Given the waning importance of cash in Sweden, the Riksbank is likewise working on the e-Krona project.

Benefits do not outweigh costs

The central banks responding to the survey cited payment safety and domestic payments efficiency as their key motivations for potentially issuing a CBDC. However, over 85% of the central banks surveyed see themselves as either somewhat unlikely or very unlikely to issue any type of CBDC in the short term. The study concludes that “most central banks appear to have clarified the challenges of launching a CBDC but they are not yet convinced that the benefits will outweigh the costs”.

This is not the first time that the BIS has addressed the issue of central bank digital currencies. Previous publications have seen the Basel-based institution, which is known as the central banks’ bank, urge caution on the grounds of risks to financial stability in times of crisis, amongst other reasons. Bundesbank President Jens Weidmann, too, has taken a critical stance towards central bank digital currencies in the past, most notably warning of the danger of a digital bank run with serious repercussions for the banking system.