Central bank digital currencies (CBDCs) "deserve consideration" as an additional means of payment, says a report from the Bank for International Settlements (BIS).
In its annual economic report, BIS says that while central banks play a pivotal role in safeguarding the payments system, they also need to foster innovation.
One significant way in which they are looking to innovate is through the investigation of CBDCs. Last year, BIS surveyed 63 central banks, finding that 70% are currently, or soon will be, engaged in CBDC work. Since then, Canada, Italy and Thailand, among others, have taken significant steps on the issue.
The central bankers' bank has previously urged caution on the subject but it now says such digital currencies "could offer a new, safe, trusted and widely accessible means of payment".
Benoît Cœuré, head, BIS Innovation Hub, says: "Central banks around the world are stepping up their efforts to study CBDCs and, whether wholesale or retail, the goal is to create safe and reliable settlement instruments for transacting in the digital economy."
Elsewhere, the report urges central banks to keep evolving to ensure the safety and integrity of a payment system that is undergoing rapid digital innovation.
BIS also notes the Covid-19 pandemic's effect on retail payments, with a focus on unequal access among the poor and unbanked. It highlights the surge in contactless payments to more than 33% of card-present transactions from just over 27% in September, as well as the rapid growth in e-commerce, the slide in cross-border transactions and a forecast 20% drop in migrant remittances.