BIS OPTIMISTIC ABOUT CENTRAL BANK DIGITAL CURRENCIES

Last updated: June 19, 2025, 22:44 | Written by: Anthony Di Iorio

The global financial landscape is undergoing a seismic shift, and at the heart of this transformation lies the concept of Central Bank Digital Currencies (CBDCs). Ninety-four percent of surveyed central banks are exploring a central bank digital currency (CBDC). The survey suggests that central banks are proceeding at their own speed, taking diverse approaches and considering different design features.The Bank for International Settlements (BIS), often dubbed the ""central bank of central banks,"" is exhibiting a strong and optimistic stance on the potential of these sovereign digital currencies.What are CBDCs, and why is the BIS so bullish about their future? Central bank (CB) Digital Currencies, or CBDCs, are a novel form of digital central bank (CB) money that represent the culmination of state efforts to manage this digital transition. They are designed to provide attractive instruments for both wholesale and retail functions, as well as bolster CBs influence and control over the economySimply put, a CBDC is a digital form of a country's fiat currency, issued and regulated by its central bank – essentially, a digital banknote. According to a comprehensive survey by the Bank for International Settlements (BIS) in 2025, 86 central banks worldwide are deeply engaged in CBDC development. This burgeoning interest signals a significant move towards integrating digital currencies into the mainstream financial system, aiming to modernize payment mechanisms and enhanceUnlike cryptocurrencies like Bitcoin, which are decentralized and often volatile, CBDCs offer the stability and trust associated with government-backed money. Skip to main content Bitcoin Insider. MenuThe BIS views CBDCs not merely as a technological upgrade to existing payment systems but as a crucial tool for maintaining the stability and relevance of the monetary system in an increasingly digital world. Certain observers assert that private digital currencies such as Bitcoin, Ethereum, and the Facebook-proposed Libra could become widely accepted forms of payment. In response, some analysts suggest central banks should issue central bank digital currencies (CBDCs) to maintain government-issued money s central economic role.This article delves into the BIS's perspective, explores the potential benefits and challenges of CBDCs, and examines the current state of global CBDC development.Are CBDCs the future of money, and what does the BIS's optimism mean for you?

Understanding Central Bank Digital Currencies (CBDCs)

To fully appreciate the BIS's optimism, it's essential to understand what CBDCs are and how they differ from other forms of digital money. CBDCs are digital forms of central bank money, distinct from commercial bank money (the money held in your bank account) and e-money (like PayPal balances). BTCUSD Bitcoin BIS optimistic about central bank digital currencies. The central bank of central banks says CBDCs are necessary for maintaining the status quo of the legacy financial systemThink of it as digital cash issued directly by the central bank.

Key Characteristics of CBDCs:

Central Bank Liability: CBDCs are a direct liability of the central bank, meaning the central bank guarantees their value.
Sovereign Currency: They represent the digital form of a country's official currency.
Potentially Interest-Bearing: Unlike physical cash, CBDCs could potentially earn interest, depending on the design.
Programmable: CBDCs can be programmed with specific rules or conditions, enabling innovative use cases.

It's important to note that CBDCs are not cryptocurrencies. O banco central dos bancos centrais diz que os CBDCs s o necess rios para manter o status quo do sistema financeiro legado.Cryptocurrencies rely on decentralized blockchain technology, while CBDCs are centrally controlled by the issuing central bank. A group of seven central banks (Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Board of Governors of the Federal Reserve System, Sveriges Riksbank and the Swiss National Bank) together with the Bank for International Settlements, have been working together to explore selected aspects of central bank digital currencies (CBDCs) for the public ( generalThis centralized control allows for greater stability and regulatory oversight but also raises questions about privacy and control.

The BIS's Optimistic View: CBDCs as an Opportunity

The BIS has consistently advocated for the development and implementation of CBDCs, viewing them as an ""opportunity for the monetary system."" In their report, ""CBDCs: an opportunity for the monetary system,"" BIS researchers argue that sovereign digital currencies offer unique advantages:

Maintaining Monetary Sovereignty: As private digital currencies gain traction, central banks see CBDCs as a way to maintain control over their monetary policy and prevent the erosion of sovereign currencies.The BIS recognizes the potential for private digital currencies like Bitcoin or stablecoins to become widely used, potentially challenging the role of traditional fiat currencies.
Improving Payment Systems: CBDCs can enable faster, cheaper, and more efficient payment systems, both domestically and cross-border.They can bypass traditional intermediaries, reducing transaction costs and settlement times.
Promoting Financial Inclusion: CBDCs can provide access to financial services for the unbanked and underbanked populations, who often lack access to traditional banking services. The Bank for International Settlements (BIS) has reaffirmed its support for central bank digital currencies (CBDCs). In a report titled CBDCs: an opportunity for the monetary system, BIS researchers argued that sovereign digital currencies offered the unique advantages of central bank money.This is particularly important in emerging economies where a significant portion of the population is excluded from the formal financial system.
Supporting Innovation: CBDCs can serve as a platform for innovation in the financial sector, enabling the development of new products and services.Programmability allows for novel applications like automated payments and smart contracts.

The BIS believes that CBDCs are essential for preserving the status quo of the legacy financial system in the face of increasing digitization.They see CBDCs as the embodiment of digital money designed for the public good, best suited for integration with instant retail payment systems.

Global CBDC Development: A Progress Report

The interest in CBDCs is not just theoretical. The National Bank of Rwanda (NBR) has become the latest African central bank to join the digital currency movement afterCentral banks around the world are actively exploring and experimenting with the technology.According to a 2025 BIS survey, a remarkable 86% of central banks are actively researching CBDCs, 60% are experimenting with the technology, and 14% are deploying pilot projects.

Key Findings from the BIS Survey:

Widespread Exploration: The vast majority of central banks are taking CBDCs seriously.
Experimentation on the Rise: A significant number of central banks are moving beyond research and actively testing CBDC technologies.
Pilot Projects Underway: Several countries are already running pilot programs to assess the feasibility and impact of CBDCs.

The survey also revealed that central banks are proceeding at their own pace, taking diverse approaches and considering different design features. Central bank digital currencies (CBDCs) are a kind of digital money issued by a central bank, but are not cryptocurrency and would not replace cash. CBDCs offer potential benefits for financial inclusion, but there are concerns that need to be considered, as the World Economic Forum s Digital Currency Governance Consortium White Paper SeriesThis reflects the fact that the motivations for issuing CBDCs vary across countries, as do the policy approaches and technical designs.

The BIS anticipates that there could be as many as 15 retail and nine wholesale CBDCs in circulation by 2025. The Bank for International Settlement remains optimistic about central bank digital currencies and has issued a report arguing for the role of CBDCs in maintaining the status quo of the current legacy financial system.Other estimates suggest that around two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade. Central banks have been providing trusted money to the public for hundreds of years as part of their public policy objectives. Yet the world is changing. To evolve and pursue their public policy objectives in a digital world, central banks are actively researching the pros and cons of offering a digital currency to the public (a general purpose central bank digital currency (CBDC)).This signals a significant move towards integrating digital currencies into the mainstream financial system.

Retail vs. a new form of money: central bank digital currency (CBDC). A recent survey found that 80% of central banks are engaged in investigating CBDC and half have progressed past conceptual research to experimenting and running pilots (Graph 1). To coordinate and consolidate some of this work, the centralWholesale CBDCs: Understanding the Difference

When discussing CBDCs, it's important to distinguish between retail and wholesale CBDCs:

Retail CBDCs: These are designed for use by the general public, similar to digital cash.They can be used for everyday transactions, such as buying groceries or paying bills.
Wholesale CBDCs: These are designed for use by financial institutions, primarily for interbank payments and settlement. A 2025 BIS survey of central banks found that 86% are actively researching the potential for central bank digital currencies, 60% were experimenting with the technology and 14% were deploying pilot projects. In simple terms, a central bank digital currency would be a digital banknote.They can improve the efficiency and security of large-value transactions.

While both types of CBDCs have the potential to improve the financial system, retail CBDCs have a more direct impact on consumers and businesses.The BIS is particularly interested in the potential of retail CBDCs to promote financial inclusion and improve payment systems.

The Role of the BIS in CBDC Development

The BIS plays a crucial role in coordinating and supporting central banks' efforts to develop CBDCs. Central Bank Digital Currencies are a new form of electronic money that, unlike well-known cryptocurrencies, are issued by central banks of certain countries. CBDC Tracker is an information resource for CBDC with news, updates and technology information.The organization provides a platform for central banks to share knowledge, collaborate on research, and develop common standards.

BIS Initiatives:

CBDC Working Groups: The BIS hosts working groups that bring together experts from central banks around the world to discuss key issues related to CBDC design and implementation.
Research and Publications: The BIS publishes research reports and working papers on CBDCs, providing valuable insights and analysis for central banks.
Innovation Hubs: The BIS Innovation Hub develops practical solutions for central banks to improve the functioning of the financial system, including projects related to CBDCs.

A group of seven central banks (Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Board of Governors of the Federal Reserve System, Sveriges Riksbank, and the Swiss National Bank), together with the BIS, are working together to explore selected aspects of CBDCs for the public.

Challenges and Considerations Surrounding CBDCs

While the BIS is optimistic about the potential of CBDCs, it also acknowledges the challenges and considerations that need to be addressed before widespread adoption. As highlighted in the report by the BIS and seven central banks, central banks need to be in a position to make an informed judgment when it comes to the decision on a central bank digital currency. 3. Any dedicated central bank digital currency should be designed carefully.These include:

Privacy: Balancing the need for transparency and regulatory oversight with the need to protect individual privacy is a key challenge.How can CBDCs be designed to prevent the government from tracking every transaction without compromising law enforcement efforts?
Security: CBDCs must be secure from cyberattacks and fraud.The infrastructure supporting CBDCs must be robust and resilient to prevent disruptions and data breaches.
Financial Stability: CBDCs could potentially impact the stability of the financial system, particularly during times of economic stress. A group of seven central banks (Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve, Sveriges Riksbank and Swiss National Bank), together with the Bank for International Settlements, are working together to explore central bank digital currencies (CBDCs) for the public ( general purpose or retail'' CBDC).Central banks need to carefully manage the potential for bank disintermediation (where individuals move their deposits from commercial banks to CBDCs) and the impact on lending.
Monetary Policy: The introduction of CBDCs could affect the transmission of monetary policy. The Bank for International Settlements (BIS) has reaffirmed its support for central bank digital currencies (CBDCs). In a report titled CBDCs: an opportunity for the monetary system, BISCentral banks need to understand how CBDCs will impact interest rates, inflation, and economic growth.
Legal and Regulatory Framework: A clear legal and regulatory framework is needed to govern the issuance and use of CBDCs.This framework must address issues such as legal tender status, data protection, and consumer protection.

The World Economic Forum's Digital Currency Governance Consortium White Paper Series also highlights these challenges, emphasizing the need for careful consideration of the potential impacts of CBDCs.

Examples of Countries Exploring CBDCs

Several countries are at the forefront of CBDC development, each with its own unique motivations and approaches:

China: China is one of the most advanced countries in terms of CBDC development, with its digital yuan (e-CNY) already being piloted in several cities. Most central banks are exploring the viability of introducing a central bank digital currency (CBDCs), according to the Bank for International Settlements (BIS), which expects there could be as many as 15 retail and nine wholesale CBDCs in circulation by 2025.China's primary motivation is to modernize its payment system and reduce its reliance on cash.
The Bahamas: The Bahamas launched its Sand Dollar CBDC in 2020, becoming one of the first countries in the world to issue a digital currency. In a report titled CBDCs: an opportunity for the monetary system, BIS researchers argued that sovereign digital currencies offered the unique advantages of central bank money. According to the report, CBDCs are the embodiment of digital money designed for the public good and are best suited for interfacing with instant retailThe Bahamas aims to improve financial inclusion and reduce the cost of payments.
Nigeria: Nigeria launched its eNaira CBDC in 2021, hoping to boost financial inclusion and reduce the use of cash. Digital currencies, and especially those which have an embedded decentralised transfer mechanism based on the use of a distributed ledger, are an innovation that could have a range of impacts on various aspects of financial markets and the wider economy.However, the eNaira has faced challenges in terms of adoption and user experience.
European Union: The European Central Bank (ECB) is exploring the possibility of launching a digital euro, with a decision expected in the coming years. Central bank digital currencies (CBDCs) are receiving more attention than ever before. Yet the motivations for issuance vary across countries, as do the policy approaches and technical designs. We investigate the economic and institutional drivers of CBDC development and take stock of design efforts. We set out a comprehensive database of technical approaches and policy stances on issuanceThe ECB aims to maintain monetary sovereignty and provide a digital alternative to private cryptocurrencies.
United States: The Federal Reserve is researching the potential benefits and risks of a U.S.CBDC but has not yet made a decision on whether to issue one.The Fed is taking a cautious approach, emphasizing the need to carefully consider the implications for the financial system and the economy.

The National Bank of Rwanda (NBR) has also joined the digital currency movement, showcasing the increasing global interest in CBDCs.

Actionable Advice for Individuals and Businesses

While CBDCs are still in their early stages of development, it's important for individuals and businesses to stay informed and prepare for the potential impact of these digital currencies:

For Individuals:

Stay Informed: Follow the latest news and developments related to CBDCs.Understand the potential benefits and risks.
Educate Yourself: Learn about digital wallets, digital security, and other concepts related to digital currencies.
Consider the Implications: Think about how CBDCs might affect your financial life, including your spending habits, savings, and investments.

For Businesses:

Monitor Developments: Track the progress of CBDC projects in your region and globally.
Assess the Impact: Evaluate how CBDCs might affect your business operations, payment systems, and customer relationships.
Prepare for Change: Be ready to adapt your business to the changing financial landscape.Consider how you might integrate CBDCs into your existing systems.

Looking Ahead: The Future of CBDCs

The future of CBDCs is uncertain, but the BIS's optimism suggests that these digital currencies are likely to play an increasingly important role in the global financial system.As technology evolves and central banks gain more experience with CBDCs, we can expect to see further innovation and adoption. In a report titled CBDCs: an opportunity for the monetary system, BIS researchers argued that sovereign digital currencies offered the unique advantages of central bank money.The ongoing research and pilot projects will provide valuable insights into the potential benefits and risks of CBDCs, helping central banks to make informed decisions about their future.

Ultimately, the success of CBDCs will depend on addressing the key challenges and considerations related to privacy, security, financial stability, and monetary policy.Central banks must work closely with governments, the private sector, and international organizations to develop a robust and sustainable framework for CBDCs.

Conclusion: Key Takeaways

The Bank for International Settlements is demonstrably optimistic about central bank digital currencies, viewing them as a critical tool for maintaining monetary sovereignty, improving payment systems, promoting financial inclusion, and supporting innovation.While significant challenges remain, the widespread research, experimentation, and pilot projects underway suggest that CBDCs are poised to reshape the future of money.Understanding the BIS's perspective and staying informed about the evolving landscape of CBDCs is essential for individuals and businesses alike.

Key takeaways from this article:

CBDCs are digital forms of central bank money, offering stability and trust associated with government backing.
The BIS views CBDCs as an opportunity to modernize the financial system and maintain its relevance in a digital world.
Global CBDC development is progressing rapidly, with many central banks actively exploring and experimenting with the technology.
Significant challenges, such as privacy and security, must be addressed before widespread adoption of CBDCs.
Individuals and businesses should stay informed and prepare for the potential impact of CBDCs.

As the world becomes increasingly digital, central banks are actively exploring how to adapt and evolve.Central Bank Digital Currencies represent one potential path forward, and the Bank for International Settlements is playing a leading role in shaping that future. A group of central banks, together with the Bank for International Settlements, are working together to explore central bank digital currencies (CBDCs) for the public ( general purpose or retail CBDC).Now is the time to understand the implications and prepare for the potential arrival of digital cash.