Global Race for CBDC – 130 Countries Already Exploring Central Bank Digital Currencies

An analysis conducted by Atlantic Council revealed that 130 countries, accounting for 98 percent of the world’s GDP, are exploring central bank digital currency (CBDC).

11 countries have partially launched CBDC, with China being a prime example.

CDBC Trends

The research estimated that 95 countries have joined the CBDC race in the last three years. Currently, 130 countries have introduced some programs, with many developed economies such as Japan, South Korea, Australia, the United Kingdom, and others. The majority of countries (46) are currently in the ‘research’ phase, while 21 countries have launched pilot tests.

– Almost every G20 country has ‘made significant progress and invested new resources into these projects in the last six months,’ stated the Atlantic Council.

Nations that appear most determined to issue a digital version of their official currencies include China, Nigeria, Bahamas, Jamaica, and other Caribbean islands.

Chinese authorities have introduced several initiatives to popularize the digital yuan. Major local cities such as Shenzhen, Jinan, and Lianyungang have offered numerous activities for this year’s Spring Festival to encourage the use of CBDC. Prior to this, officials allowed digital yuan payments during the 2022 Winter Olympics held in Beijing.

According to the analysis, progress on retail (for the public) CBDC in the U.S. has ‘stalled.’ On the other hand, the world’s largest economy has made progress on wholesale (for banks) CBDC.

– Since the Russian invasion of Ukraine and the response to G7 sanctions, the development of wholesale CBDC has doubled, claims the company behind the study.

Other leading economies such as Japan and the United Kingdom are developing prototypes and considering public consultations on the final release of CBDC.

The European Central Bank has also shown intent to introduce a digital euro. The European Commission recently shed light on the project, describing it as an alternative solution for payments used in online and offline trading.

For its part, Brazil and India plan to launch their CBDCs next year. Banco Central do Brasil recently authorized Mercado Bitcoin to participate in the project along with fintech financial software Sinqia, brokerage firm Genial, and others.

Pros and Cons of CBDC

There are various reasons why a central bank might seek to launch such a product. The Atlantic Council believes that CBDCs could promote financial inclusion by providing access to money for the unbanked population, introducing competition in local monetary markets, increasing settlement efficiency, and lowering transaction fees.

On the other hand, CBDCs differ significantly from cryptocurrencies, which are known for their decentralized nature.

CBDCs will be issued and controlled by central banks, meaning they could work against individuals’ privacy. Numerous individuals have warned about the risks posed by CBDCs. Ron DeSantis, the Governor of Florida, has sharply criticized this technology as a surveillance tool, expressing support for a ban within the southern state.

Robert F. Kennedy, who announced his candidacy for President of the United States, labeled CBDCs as products used for ‘oppression.’