Central banks are losing interest in using digital currencies for international settlements
Date: 2024-12-03 Author: Henry Casey Categories: CRYPTO PAYMENTS
According to the annual study by the OMFIF Digital Money Institute, the number of central banks actively working on CBDC projects has fallen to 10%, compared to more than 20% a year earlier.
While interest in improving cross-border payments remains high, many central banks have chosen to turn their attention to alternative systems. According to the survey, about 47% of respondents chose the American fast payment system FedNow, developed by the US Federal Reserve, as their preferred instrument for international settlements. In comparison, the popularity of CBDC in this area has fallen to 13%, while a year ago it was 31%.
OMFIF experts attribute the decline in interest in CBDC to political reasons. In particular, the mBridge project, which was launched in 2021 with the participation of the central banks of China, Hong Kong, Thailand, the United Arab Emirates and Saudi Arabia, has lost one of its key partners, the Bank for International Settlements (BIS). Although mBridge continues to be one of the most advanced platforms for multi-currency CBDCs, its implementation faces geopolitical complexities and governance issues, which undermines the trust of participants.
BIS Director General Agustín Carstens officially announced the organization's withdrawal from the project in November 2024. In his speech, he emphasized that mBridge is not intended for use by BRICS countries, including Russia, to circumvent international sanctions. "mBridge is not a tool for BRICS, and this should be clearly understood," Carstens said.
The OMFIF report also indicates that, as in the previous year, stablecoins are not considered by central banks as a promising tool for cross-border settlements. At the Global Fintech Fest conference, Christopher Waller, a representative of the US Federal Reserve, expressed the opinion that accelerating settlements between banks is not a priority task, and the benefits of introducing wholesale CBDCs for international payments are significantly exaggerated.
With the changing priorities of global central banks, the question of the future of digital currencies remains open. However, the decline in enthusiasm for CBDCs may indicate a redistribution of focus in favor of existing and less risky solutions.
