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Sunday, July 21, 2024

The Global Race to CBDCs: 130 Countries Already Exploring (Research)

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An analysis conducted by Atlantic Council revealed that 130 nations, or 98% of the global GDP, are “exploring” a central bank digital currency (CBDC).

11 countries have fully launched one, with China being an example.

A Closer Look at the CBDC Trends

The research estimated that 95 counties had joined the CBDC race in the past three years. As of the moment, 130 nations have introduced some programs, with many being developed economies, such as Japan, South Korea, Australia, the UK, and more. Most countries (46) are currently in the “research” phase, whereas 21 have launched pilot tests.

Number of Countries That are Exploring CBDC, Source: Atlantic Council

Almost every G20 country “has made significant progress and invested new resources in these projects over the past six months,” Atlantic Council stated.

The nations that seem most determined to issue a digital version of their official currencies include China, Nigeria, the Bahamas, Jamaica, and other Caribbean islands.

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

According to the analysis, the progress on retail CBDC in the United States of America “has stalled.” On the other hand, the world’s largest economy has moved forward on a wholesale (bank-to-bank) CBDC.

“Since Russia’s invasion of Ukraine and the G7 sanctions response, wholesale CBDC developments have doubled,” the company behind the study claimed.

Other leading economies like Japan and the United Kingdom are developing prototypes and are considering consulting the public on the eventual release of a CBDC.

The European Central Bank has also displayed intentions to introduce a digital euro. The European Commission recently shed more light on the project, describing it as an alternative wide-payment solution employed in online and offline trading.

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

The Pros and Cons of CBDCs

There are different reasons why a central bank would seek the launch of such a product. Atlantic Council believes CBDCs could promote financial inclusion by providing money access to the unbanked population, introducing competition in the local monetary markets, increasing the efficiency of settlements, and lower transaction fees.

On the other hand, CBDCs are much different than cryptocurrencies. The latter are famous for their decentralized nature.

CBDCs will be issued and controlled by central banks, meaning they could work against people’s privacy. Numerous individuals have warned about the release of those products. Ron DeSantis – Governor of Florida – blasted that technology as a surveillance tool, voicing support for a ban within the southern state.

Robert F. Kennedy, who announced his run for President of the US, labeled CBDCs as products used for “oppression.”

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