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The 2020 pandemic could accelerate global efforts to issue CBDCs, say BIS analysts.
A new report from the Bank for International Settlements (BIS) shows that 2020 is the year that momentum behind central bank digital currencies (CBDCs) has truly taken off.
Published on Aug. 24, BISā new working paper analyzes the global state of CBDC research and development work, technical approaches and policy stances. The comprehensive research draws on over 16,000 central bank speeches from recent years and assesses existing CBDC designs and motivations behind various countriesā embrace of the new model.
āAttitudes about whether central banks should issue them [CBDCs] have changed noticeably over the past year,ā the paperās authors write. Their research includes a striking analysis of public interest in CBDCs over time. BISā data shows that in 2020, worldwide internet searches for CBDCs decisively outflanked searches for Bitcoin (BTC) and Facebookās Libra.
The data vindicates the reportās claim that even though the concept of CBDCs was proposed decades ago, āCBDCs have seized global attentionā in 2020.
BIS provides several hypotheses as to why this may be. First, it points to the announcement of Facebookās Libra and the subsequent public sector response in 2019 as an unmistakable ātipping point.ā
Further data backs this up: as of late 2019, ācentral banks representing a fifth of the worldās population reported that they were likely to issue CBDCs very soon.ā Moreover, the share of central banks likely to issue a retail CBDC over the medium term (1-6 years) doubled in 2019.
A crucial factor quickening this trend, in BISā analysis, is the advent of the coronavirus pandemic:
āSocial distancing measures, public concerns that cash may transmit the COVID-19 virus and new government-to-person payment schemes have further sped up the shift toward digital payments.ā
BIS draws attention to the United States, where early versions of Congressional bills on fiscal stimulus referred to the potential for a digital dollar to hasten the disbursement of government aid to citizens. In the Netherlands, China and Sweden, central banks are keeping their CBDC research work a high priority during the pandemic.
All these factors could be enough, in BISā view, to overcome the āgreat inertiaā typical of retail payment behaviors. The flipside, however, is lasting impact:
āWhen behaviours change, they often do so quite persistently. In the same manner, changed payment behaviors caused by the COVID-19 crisis, such as a greater use of digital payments, could have far-reaching effects in the future.ā
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