The Bank for International Settlements (BIS) assessed 81 central banks to reveal their interest in CBDCs, finding that 60% of them are working on proofs-of-concept and 26% are undertaking pilots. In 2022 alone, the number of institutions announcing a CBDC review nearly doubled.
The majority of banks seek to collaborate with the private sector, and these CBDCs are focused on both wholesale and retail. This two-tiered design is becoming increasingly popular among central banks.
More than half of the banks think there is a significant probability they will issue CBDCs when it comes to a more detailed projection on how they would turn out.
The survey includes stablecoins, with over 70% of institutions reporting to be investigating the potential impact of stablecoins on financial stability. Over time, this percentage has actually declined.
CBDCs have gotten a lot of attention and have grown quickly in the last 18 months, owing to the rise of stablecoins and DeFi.
The latter two have caught the attention of regulators, who are concerned that they may erode the dominance of national currencies and existing financial institutions.
Governments and central banks are beginning to see the advantages of blockchain-based currencies, including faster transaction times, cheaper transaction costs, and more security.
Nigeria updates its CBDC
Even after a UN study said that limitations on digital currencies are suffocating the country’s fintech sector, Nigeria’s central bank has improved its eNaira to steer the country away from crypto.
The Central Bank of Nigeria (CBN) is moving on with plans to expand the usage of the country’s central bank digital currency (CBDC) to a wider variety of products and services. It also maintains severe crypto regulations that have hampered the country’s fintech industry.
According to a report from Vanguard, CBN branch controller Bariboloka Koyor spoke at a market in the country’s most populated metropolis of Lagos on Monday as part of a push to “sensitize” companies to the eNaira.
The naira has lost almost 209% of its value in the last six years, prompting Nigerians to flock to cryptocurrency. According to a survey released in April by the KuCoin crypto exchange, around 33.4 million Nigerians owned or exchanged cryptocurrencies in the previous six months.
Following the introduction of the eNaira in October 2021, the country’s crypto trading restrictions were strengthened.
In February of that year, the CBN barred banks from providing crypto exchanges. Still, serious enforcement came in November 2021, when the CBN ordered the accounts of two crypto dealers to be frozen.