Central banks are increasingly considering launching digital currencies, as advances in blockchain and payments technology make it increasingly more feasible, according to a report published by the Bank of Korea.
The report builds on the bank’s research into central bank digital currencies (CBDCs) around the world, which examined progress at some 14 reserve banks known to be researching or developing their own digital currencies.
In its “Overseas CBDC Progress Report,” the bank said that developments in payment settlements, coupled with the ongoing decline of cash, were pushing central banks towards taking a more serious look at digital currencies.
According to the report, a number of banks are already working on IT systems that would rely on decentralized ledger technology to distribute and record digital currency transactions.
Amongst the countries studies, Sweden, Singapore, Canada, Japan, Thailand and Hong Kong were found to be discussing distributed ledger technology in their developing models for digital assets.
Most central banks are focusing on research on whether new future-oriented technologies can be applied to CBDCs, away from the centralized ledger management and account-based transactions that are currently applied to payment and settlement systems.
The report says central banks currently divide into two camps—those looking at CBDCs for everyday transactions including small retail sales, and those looking at digital currencies for larger transactions such as commercial settlements.
Norway, the Eastern Caribbean Central Bank, the Bahamas, Sweden, the United Kingdom and China are known to be considering the technology for small transactions, while Switzerland, Singapore, Canada, Thailand, Hong Kong, and France are investigating how the technology can be used for larger scale transactions.
The report underlines the progress being made internationally by central banks towards launching their own digital currencies, which is expected to usher in a new era of mainstream adoption of blockchain technology for payments worldwide.