Central banks worldwide have been actively exploring the possibility of digitizing their currencies. In addition to pilot CBDC launches in certain regions, various jurisdictions are experimenting with CBDCs, developing use cases and proofs of concept.
Extensive studies have been performed by central banks across Europe and the U.S., assessing the pros and cons of CBDCs as well as the risks they pose, and policy makers now understand them well. Given the pace of recent developments and exploratory efforts, we see increased potential for a major central bank issuing a CBDC within the next two to three years.
This publication examines some of the key trends and developments in CBDCs over the last year. It also considers the key benefits of these assets as well as some of the challenges and risks they present for central banks and the global financial system.