By Anna Isaac and Caitlin Ostroff 

More than one-fifth of the world's population could have access to digital money issued by central banks to pay for groceries, movie tickets and even homes in the next few years, as these institutions accelerate plans to issue official cryptocurrencies.

One in 10 central banks surveyed in 2019 said they were likely to offer digital currencies within the next three years, covering about 20% of the world's population, according to a report from the Bank for International Settlements. The proportion of central banks likely to issue digital money almost doubled when the horizon was stretched to six years, the BIS said.

Federal Reserve Chairman Jerome Powell said in November the U.S. central bank doesn't currently have plans to launch a digital currency. Doing so would be difficult in the U.S., with Americans remaining more committed to cash than other nations, he said.

The rising popularity of electronic payments, and the boom in private cryptocurrencies like bitcoin, has promoted authorities to pay more attention to digital currencies. The new tools could offer faster settlements of payments and the potential to allow people to bank directly with a central bank. They may even offer monetary-policy benefits, if central banks could set rates on accounts that directly affect households, rather than using financial markets to transmit changes to borrowing costs for consumer and corporate loans.

Major technology companies, meanwhile, are interested in offering digital currencies. But Facebook Inc.'s plans to launch libra have drawn criticism from regulators and have led early partners to reconsider their support.

Central banks face big hurdles in offering dedicated digital currencies and related bank accounts to the general public, the BIS's general manager, Agustín Carstens, said in December. Still, policy makers in the Caribbean, including the Central Bank of the Bahamas and the Eastern Caribbean Central Bank, are testing digital money, according to the BIS.

Some 66 central banks, representing 90% of the world's economic output, took part in the survey in 2019, according to Switzerland-based BIS, which is owned by some of the world's biggest central banks, including the Fed. A year earlier, only one in 20 monetary authorities were considering rolling out digital money in the short term.

In response to the rapid decline in the use of cash in recent years, Sweden's Riksbank began working on its e-krona pilot program in 2017. Uruguay's central bank, which piloted a program between late-2017 and mid-2018 that let individual users hold a maximum of 30,000 e-Pesos ($1,000 U.S. dollars) in a digital wallet, is considering its next steps.

Central banks in general have been hesitant about creating digital currencies, according to Darrell Duffie, a finance professor at Stanford University. Questions remain on how to monitor transactions to prevent fraud and whether such currencies would be linked to interest rates.

"It's a responsibility I think central banks don't want," Mr. Duffie said.

Write to Anna Isaac at anna.isaac@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

January 23, 2020 11:30 ET (16:30 GMT)

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