Just when we thought the idea of a central bank-issued digital currency was gaining momentum, findings in the latest survey conducted by the Bank for International Settlements (BIS), unveils how central banks are in no hurry to issue a digital version of their currency.
The BIS, a global forum for central banks, conducted a study in relation to e-money with 63 central banks representing over 90% of global economic output and 80% of the world’s population. Results showed only five central banks progressing e-money pilot projects while the rest remained wary, warning investors on the risks of digital currencies in losing money on privately “minted” cryptocurrencies – like Bitcoin – which has proven to be no stranger to loss.
The risk, however, has not slowed the Riksbank’s e-Krona project, nor project Stella – a collaborative effort between the European Central Bank (ECB) and the Bank of Japan . Others are following suit like the Central Bank of Uruguay’s pilot program on digital banknotes as well as The Bank of England, Bank of Canada and Monetary Authority of Singapore also have a joint project.
Central Bankers recently raised the idea of Central Bank Digital Currencies (CBDCs) where even the International Monetary Fund (IMF) and its managing director, Christine Lagarde, expressed the potential role of states in issuing digital currency to supply money to the digital economy. Meanwhile, more than 85% of central banks say they are either unlikely or very unlikely to issue any type of digital currency in the next three years, whereas only one central bank said it was very likely to issue a digital version if its currency in the next six years, the BIS reports.
“At this stage, 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,” the BIS said.
Digital currencies have, for a while now, been more than just a figment of one’s imagination. As to when it will fully take off into reality? We do not know. Until then, we can be rest assured that cash remains our lifeline throughout certain digital falls.