Lessons learnt on CBDCs Report submitted to the G20 Finance Ministers and Central Bank Governors
Released July 2023
Central bank money has unique advantages – safety, finality, liquidity and integrity (BIS (2021)). As economies go digital, they should continue to benefit from these advantages. Given that money sits at the heart of the financial system, it must continue to be issued and controlled by trusted and accountable institutions that have public policy – not profit – objectives (Cœuré (2021), Carstens (2022)).
The world’s central banks are stepping up efforts to prepare the ground for central bank digital currencies (CBDCs) either as digital cash (retail) or tokenised reserves (wholesale). A well designed CBDC will be a safe and neutral1 means of payment and settlement asset, serving as a common interoperable foundation upon which the new payment ecosystem can develop. It will enable an open and integrated finance architecture, while fostering competition and further innovation.
To build a CBDC for the public, a central bank must understand what users need, and work closely with other authorities and stakeholders to deliver it. With its Innovation Hub, the BIS has focused on the practical details of CBDC designs. CBDCs will take years to be rolled out widely but stablecoins and cryptoassets are already here. This makes it even more urgent to start such research efforts.
In our centres around the world, the Hub already has 12 CBDC-related proofs of concept (PoCs) and prototypes either completed or under way, with more to come. This report shows how the BIS Innovation Hub (BISIH) (Graph 1 and Box A) is helping central banks to embark on their CBDC journeys and discusses the lessons learnt so far. The report starts by introducing the BISIH and how it operates. It then presents the different CBDC projects, splitting them into retail and wholesale as well as domestic and cross-border use cases. For each category, the key insights and lessons learnt are presented from the perspectives of desirability, feasibility and viability. In conclusion, a gap analysis seeks to guide the Hub, central banks and other policy makers on what should come next in terms of CBDC experimentation. The individual projects are summarized in Annex A.