A new survey by the Bank for International Settlements (BIS) reveals a significant increase in central bank digital currency (CBDC) experiments, particularly among central banks in advanced economies.

The survey, conducted by BIS and involving 83 central banks, indicates a "sharp uptick" in CBDC-related activities in 2023. Proof of concept projects among these central banks rose by 35% from 2022 to 2023, while CBDC pilot projects nearly tripled in the same period.

BIS researchers highlighted in a June 2024 paper that central banks are progressing at their own pace, employing diverse approaches and considering various design features for CBDCs. Despite the increased activity, only a little over a third of all 222 central banks participated in the survey. Of these, 28 were from advanced economies, and 58 were from developing economies.

The data show that 54% of the surveyed central banks are experimenting with proofs of concept or the underlying technology for CBDC issuances. Additionally, about a third of the institutions reported running CBDC pilots. Notably, among advanced economy central banks, 81% were involved in wholesale CBDC-related proof of concept experiments, and 33% were conducting pilots. This represents a significant increase from the previous year, where these figures were 60% and 10%, respectively.

In contrast, central banks in emerging market and developing economies (EMDEs) are engaging in CBDC experiments at a lower rate. Approximately a third of EMDE central banks are working on proof of concept projects, and only 19% are conducting pilots, with these rates remaining largely unchanged from the previous year.

While the pace of CBDC exploration is accelerating in advanced economies, the adoption of stablecoins remains limited. As of May 2024, the total market capitalization of cryptocurrencies stood at $2.7 trillion, with stablecoins comprising just 6% of this market at $161 billion, according to BIS data.

This increased interest in CBDCs highlights the evolving landscape of digital currencies and the varied approaches central banks are taking to explore their potential. The ongoing experiments and pilots are crucial for understanding the practical implications and benefits of implementing CBDCs on a wider scale.