Up to 93% of the world’s central banks are experimenting with some form of digital currency (CBDC), with two dozen expected to have one in circulation by the end of the decade, the Bank for International Settlements (BIS) found in a survey.

The BIS surveyed 86 central banks, whose national jurisdictions cover 82% of the world’s population and 94% of global gross domestic product (GDP), late last year on their involvement in CBDCs and intentions to issue one. It found that 15 retail and nine wholesale CBDCs could be in circulation by the end of the decade.

CBDCs are digital currencies issued by a nation’s central bank. Unlike cryptocurrencies, their value is determined by a central authority and linked to fiat currency. 

Retail CBDCs are those available to households and the general public for transactions and payments. They differ from other cashless forms of payment in that they represent a claim, or liability, on a central bank rather than a liability on a private bank.

Wholesale CBDCs, on the other hand, aren't available to the general public and are instead used to facilitate transactions between banks, central banks, and other financial institutions. If implemented, they would serve a role similar to bank reserves or balances held at central banks. Unlike reserves, however, they would have the added benefit of tokenization and programmability.

In total, more than 90% of the world’s central banks are either engaged in or experimenting with CBDCs, including conducting research, designing and testing prototype CBDCs, and consulting with public and private stakeholders on the matter.

Almost 60% of the central banks surveyed said the emergence and growing popularity of cryptocurrencies and stablecoins has accelerated their work in developing CBDCs.

So far, four central banks in the Bahamas, Jamaica, Eastern Caribbean, and Nigeria have issued a retail CBDC, and 18% of those surveyed intend to issue one in the near future. The Swiss National Bank (SNB) last month said it would issue a wholesale CBDC on the country’s digital exchange, while the European Central Bank (ECB) plans to launch a digital euro in coming years. Others, including the Federal Reserve Bank of New York, have published the results of recent CBDC experiments.

Many of the central banks surveyed are actively collaborating with the private sector and considering using private intermediaries to distribute CBDCs. The Bank of England (BOE), ECB, and Reserve Bank of India have proposed that a digital pound, euro, and rupee could be distributed via the private sector.

U.S. CBDC May Face Congressional Opposition

While the Biden administration has highlighted the potential benefits of a CBDC in the U.S., the initiative is likely to encounter considerable opposition in Congress. In March, U.S. Senator Ted Cruz (R-Texas) introduced a bill that could potentially block the Federal Reserve from launching its own digital currency, saying it could be used as a surveillance tool to monitor and centralize Americans' sensitive financial information.

"The American people ought to be able to spend their money how they choose without the possibility that every transaction could be tracked by the government," said the bill's co-sponsor, Sen. Chuck Grassley (R-Iowa).