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2023 BIS Survey: CBDC and Crypto Trends Revealed
2023 BIS Survey Results | Jun 20, 2024
Image: BIS Paper 147
5 Key Trends in CBDCs and Crypto Regulation
The 2023 BIS study on central bank digital currencies (CBDCs) and cryptoassets gives readers a good review of the current trends, innovations, and regulatory initiatives in it's latest report titled, "Embracing Diversity, Advancing Together - Results of the 2023 BIS Survey on Central Bank Digital Currencies and Crypto" (BIS Paper 147).
See: Federal Reserve on U.S. CBDC and Global Comparison
With 94% of surveyed central banks researching CBDCs, the report shows a significant growth in wholesale CBDC research in advanced economies (AE). The results also provide insights into the motives and design elements of mature and emerging markets, increased stakeholder participation, and shifting regulatory frameworks for stablecoins and cryptoassets.
1. Increased Wholesale CBDC Activity
There has been a huge surge in wholesale CBDC trials in advanced economies. For example, the percentage of AE central banks running proofs of concept increased to 81%, while pilots increased to 33% by 2023. Several central banks, like the Swiss National Bank (Project Helvetia Phase III), the Bangko Sentral ng Pilipinas (Project Agila), and the European Central Bank, are actively participating in these trials.
2. Differentiation Between Advanced and Emerging Economies
The survey shows varying motivations and design characteristics between AEs and emerging market and developing economies (EMDEs).
See: Saudi Arabia Joins mBridge CBDC Project, Digital Oil Trade
- 68% of AEs prioritize interoperability with existing domestic payment systems.
- 63% of EMDEs are more inclined to use holding limits to maintain financial stability. Furthermore, EMDEs are more likely to embrace distributed ledger technology, demonstrating their desire to leapfrog legacy systems.
3. Stakeholder Engagements Are Increasing to Inform CBDC Design
- Overall, 88% of central banks are conducting CBDC research, with 54% carrying out pilots.
- In retail CBDCs, 75% of AEs and 78% of EMDEs are consulting with governments and public officials.
- Examples of such involvement include the Bank of Japan's CBDC Forum and the National Bank of Georgia's collaboration with a technology firm on its digital GEL initiative.
4. Developing Regulatory Frameworks for Cryptoassets
- More than 60% of jurisdictions have or are developing regulatory frameworks for stablecoins and other cryptoassets. This includes 48% creating bespoke regulations due to the unique opportunities and risks posed by cryptoassets.
See: The Ripple Effect of CBDCs on Bank Lending and Profitability
- Notable examples are the UK's proposed regulatory regime for stablecoins and the EU's Markets in Crypto-Assets Regulation (MiCA). The main regulatory objectives are investor protection (89%), financial stability (83%), and countering illicit finance (82%).
5. Current Use of Stablecoins
- The report indicates that the use of stablecoins for payments outside the crypto ecosystem remains minimal. More than half of central banks reported that stablecoins are rarely used beyond crypto trading or decentralized finance, mainly for niche use cases like remittances.
- For example, Chainalysis reported that around 5% of remittances to Mexico in 2022 were made using stablecoins or other cryptoassets.
- About 18-25% of central banks are uncertain about the extent of stablecoin usage due to a lack of appropriate data.
Closing Outlook
The 2023 BIS survey highlights active and varied approaches to CBDC exploration and cryptoasset regulation.
See: CBDCs in Canada and Impact Drivers on Banking Choices
Continued collaboration and stakeholder involvement will be critical for any sort of practical rollout and adoption, which has potential for both established and emerging nations.
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