PwC: More Than 80% of Central Banks Are Considering Launching a CBDC

Central bank digital currencies will greatly benefit cross-border transactions and economies, the firm says

article-image

Source: Shutterstock

share

key takeaways

  • Central banks are going to continue to investigate CBDCs, PwC analysts say
  • Stablecoins offer many of the same benefits as CBDCs but without the surveillance that comes with a government-issued currency

The vast majority of central banks are considering launching a central bank digital currency (CBDC), according to analysts at accounting firm PwC.

“CBDCs will facilitate more effective, lower cost and 24/7/365 cross-border payments for the financial services industry,” analysts from PwC said in the firm’s annual index of CBDCs and stablecoins, which was released Monday. “We expect that CBDCs will greatly benefit cross-border transactions and economies of all relevant jurisdictions.”

Overall, retail CBDC projects, which are digital currencies designed for public use, have reached greater maturity levels than wholesale projects, which are digital currencies used by financial institutions that have accounts with central banks, the report notes. There has been an increase in wholesale pilots in recent years though, analysts said.

China became the first major economy to pilot a retail CBDC in 2020 with the digital yuan. The pilot is running in 12 cities as of March 2022. 

The Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, was the first retail project of its kind. Nigeria’s central bank launched the first CBDC in Africa, the eNaira, shortly afterwards. 

On the wholesale side, PwC ranked the combined effort from the Hong Kong Monetary Authority and the Bank of Thailand to launch mBridge as the top product. The central banks are working to develop a proof-of-concept prototype to enable real-time, cross-border foreign exchange payments on distributed ledger technology.

Other top projects include efforts by Canada, Singapore, France and South Africa.

“Wholesale CBDCs have the potential to streamline security token post-trade operations through atomic delivery-versus-payment and increase the market efficiency for several asset classes,” Benoit Sureau, PwC France and Maghreb financial services risk and blockchain partner, said.

PwC analysts for the first time included a stablecoin overview in the annual CBDC index report, noting that privately issued tokens will continue to evolve and exist alongside CBDCs. 

Stablecoins reached a market capitalization of around $190 billion in early 2022 and will continue to grow as the tokens offer many of the same benefits as a CBDC without the surveillance that comes with a government-issued currency, the report noted. 

Transparency around reserve assets, particularly for stablecoins that are backed with fiat currency, will be a major concern going forward, though, as the asset class continues to grow and regulation ramps up, analysts added.

“The role of the stablecoin in the crypto markets has and will continue to evolve as adoption of crypto increases, forcing a more prominent role of stablecoins across the larger financial ecosystem,” Matt Blumenfeld, director and digital asset specialist at PwC said. “Regulation will only strengthen the importance and give credence to the role that stablecoins will play.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

MON - WED, MARCH 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience:  Attend expert-led panel discussions and fireside chats  Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts   Grow your network […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Frax report cover.jpg

Research

Frax saw continued development in its frxETH liquid staking derivative and Fraxlend money market throughout 2023. Frax V3 introduces an RWA strategy to drive utility to the protocol's cornerstone product, the FRAX stablecoin.

article-image

As of Wednesday, the US government had seized Sinbad’s website

article-image

Cross-chain protocol’s product development-focused unit Wormhole Labs formally launches following $225 million raise

article-image

Accredited and non-accredited investors worldwide will be able to purchase the Note starting Dec. 6 on US-regulated trading platform INX

article-image

Bitcoin’s next halving is less than five months away. History says they’re bullish but will this time be different?

article-image

Merger is set to allow the combined business to “flex between our different lines of business,” Hut 8 CEO says

article-image

Agency’s decision to start comment window earlier than expected could be bullish for spot bitcoin ETF approval in January, industry watchers say