A Third of Central Banks Cool on Launching CBDCs Over Regulatory Concerns

Central Bank Digital Currencies (CBDCs) have been at the forefront of discussions among financial institutions worldwide.

Overview

A survey of 34 central banks, released on February 11 2025, by the think tank Office Monetary and Financial Institutions Forum (OMFIF) and security technology firm Giesecke+Devrient Currency Technology, revealed that those intending to launch a CBDC are proceeding with their plans, while approximately 31% have postponed implementation. The report said, “Key reasons for the delays include concerns with regulatory and governance frameworks and unforeseen economic challenges taking priority over CBDC work.” It added, “Establishing legislation is also partially dependent on political will, rather than the central bank’s technical capacity or decision on policy.” 

While many central banks are exploring their potential, a significant portion remains hesitant due to regulatory concerns. A recent Bank for International Settlements (BIS) survey reveals that approximately one-third of central banks are reluctant to implement CBDC, citing compliance uncertainties, monetary policy impact, and financial stability risks. The regulatory landscape for digital currencies remains fragmented across jurisdictions, making it difficult for central banks to navigate. 

Many fear that launching a CBDC without a well-defined legal framework could result in unintended consequences, including risks related to money laundering, cybersecurity threats, and potential disruptions to the existing financial system. This hesitation underscores the need for clear regulatory guidelines before mass adoption.

Financial Stability and Monetary Policy Implications

Another major factor contributing to central banks’ reluctance is the potential impact of CBDCs on financial stability and monetary policy. Traditional banking institutions worry that widespread adoption of CBDCs could lead to disintermediation, where consumers opt to hold digital currency directly with the central bank instead of depositing funds in commercial banks. 

This shift could reduce banks’ lending ability, affecting liquidity and economic growth. Moreover, monetary policy implementation could become more challenging if CBDCs alter the velocity of money circulation. Central banks use interest rate adjustments and open market operations to influence inflation and economic activity. Introducing CBDCs might necessitate new approaches to these strategies, requiring extensive testing and collaboration with financial institutions to mitigate risks.

The Future of CBDCs: Slow But Steady Progress

Despite these concerns, many central banks continue to explore CBDCs, albeit with a cautious approach. Countries such as China, the Bahamas, and Nigeria have already launched their digital currencies, providing valuable insights into the potential benefits and challenges. Other nations, including the United States and members of the European Union, are conducting pilot programs and research better to understand the implications of CBDCs on their economies. 

To address regulatory concerns, some central banks collaborate cross-border and work with international organisations to develop standardised frameworks. Regulatory sandboxes, which allow for controlled experimentation with digital financial products, are also used to assess potential risks and ensure compliance before full-scale implementation. 

While a third of central banks remain hesitant, the momentum behind CBDC development is unlikely to slow down entirely. With proper regulatory clarity and strategic planning, central banks could leverage CBDCs to enhance financial inclusion, improve payment efficiencies, and strengthen monetary policies in the digital age. However, until the regulatory landscape is fully defined, caution will remain dominant in the journey toward widespread CBDC adoption.