An increasing number of central banks around the world are analyzing, testing and developing CBDCs as prototypes. These initiatives are strongly supported by the Bank for International Settlements (BIS).

Over the past nine months, central banks (CBs) have expressed their interest in CBDCs (Central Bank Digital Currencies) and their CBDC plans and initiatives. The number of central banks working on CBDC projects has grown steadily since then. This momentum has been endorsed and supported by the BIS. The official implementation of the first comprehensive CBDC project is about to begin.

The BIS endorsement

The BIS Annual Report 2019, which was published on 30 June 2020, provides a detailed discussion of the CBDCs. The BIS encourages innovations by central banks aimed at simplifying the provision of payment services, reducing their prices and improving their quality. The BIS recognises that such an innovative stance would foster competition within the private sector and improve security and risk management standards.
The BIS distinguishes between wholesale and retail CBDCs. Compared to current systems, the wholesale digital central bank currency based on Distributed Ledger Technology (DLT) has the potential to increase the efficiency of the financial sector in accessing central bank money. Wholesale CBDCs simplify post-trade clearing and settlement, increase speed of execution and can improve risk management in the area of fraud and cyber-attacks.

Retail CBDCs are different, and depending on their design, their introduction can have far-reaching implications. Retail CBDCs would be comparatively safer and more reliable than current cash, but could result in a larger central bank footprint in the financial system. In addition, they could accelerate banking operations in stress situations. Retail CBDCs could yield interest rates and influence monetary policy transmission.

Digital currencies for the retail sector would have to be at least equivalent to current cash holdings in terms of various parameters, such as user-friendliness and resistance to failures and cyber attacks. CBDCs for retail would have to protect the privacy of the user while improving traceability and facilitating compliance with anti-money laundering regulations. Their introduction could be gradual and could coexist – possibly in the longer term – with current cash.

Recent initiatives

The number of central banks involved in CBDC projects is growing steadily.

  • The Bank of Canada has announced plans for a pilot retail CBDC. They believe that the digital currency should be available to all citizens and could guarantee the protection of privacy while ensuring compliance with anti-money laundering regulations.
  • The Bank of Thailand announced plans to develop a prototype CBDC and to test real-world use cases with large corporations. Its goal is to increase the efficiency of money transfers and payment processing between suppliers.
  • The Bank of Korea followed the launch of a CBDC pilot program in April 2020 with the announcement of a legal advisory panel focused on identifying and overcoming regulatory hurdles. This work should pave the way for the CBDC roadmap.
  • The Bank of Ghana reaffirmed its commitment to the CBDC pilot project. The plan was first announced in late 2019.

A long but solid maturation period

Over the past nine months, central banks have become more open towards CBDCs. In the fourth quarter of 2019, we recall the announcement of the establishment of a BIS Innovation Centre in Switzerland and the BIS’s recognition that the digitalization of means of payment is inevitable. Earlier this year, the BIS published a survey showing the extensive work being carried out by central banks on CBDCs. The BIS also brought together the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, Sveriges Riksbank and the Swiss National Bank in an official group to share experiences with the CBDCs.

In Europe, the European Central Bank committed to pursue the issuance of a CBDC in 2020. In Asia, the People’s Bank of China confirmed that it would continue its work on CBDCs in 2020, and in the Americas, the Federal Reserve confirmed its research and experimentation activities on DLTs and their potential use in connection with CBDCs.

In January 2020, Christian Noyer, former governor of the Banque de France, stated on record that CBDCs would soon become a reality in the wholesale market; time will most likely prove him right. A growing number of central banks are interested in issuing CBDCs, and wholesale CBDCs are proving easier to implement than retail CBDCs. The reason for this is that retail CBDCs require more analysis and design care because of their potential ability to interact with monetary policy. CBDC initiatives are strongly supported by the BIS and are fundamentally driven by the need to improve the quality and cost of the global provision of payment services.


The introduction of Blockchain-based technology by central banks and the issuance of corresponding CBDCs to improve the current flow between commercial banks and central banks (wholesale CBDCs) or to digitize fiat money (retail CBDCs) began – in a noticeable way – nine months ago. Since then, it has grown steadily around the world, driven by the full support of the BIS and by the opportunity to improve the quality and cost of international payment service provision.

The strong trend towards experimentation and testing of CBDCs clearly indicates that the first CBDC will have a wholesale character and that implementation will take place soon. The implementation of concrete applications of Blockchain-based digital currencies at the level of the official sector is then likely to increase the credibility and popularity of such technologies and monetary innovations.

*Originally published in German at

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