Central Bank Digital Currencies (CBDCs) are evolving. There are already 130 countries actively engaging in CBDC-related initiatives, according to insights from the Atlantic Council. These countries are delving into diverse use cases for CBDCs, spanning wholesale payments, retail transactions, and cross-border remittances, indicating a broad spectrum of applications.
Initiatives for CBDC Development
These countries are spearheading the future of CBDCs by undertaking a range of initiatives including:
Prototypes Development: Many nations are proactively developing prototypes of their CBDCs. It serves as a sandbox for technology testing and user feedback collection. For instance, the Bank of England is actively engaged in the creation of a retail CBDC prototype. Meanwhile, the Monetary Authority of Singapore is diligently working on a wholesale CBDC prototype.
Pilot Programs: Several countries are taking the path of conducting pilot programs for their CBDCs, offering access to a limited number of users for practical testing. Notably, China has been at the forefront of this approach, piloting its CBDC, the digital yuan, across several cities since 2020. Meanwhile, the Bahamas stands out with the successful launch of a CBDC pilot, available to all citizens.
Official CBDC Launches: A select few countries have already taken the significant step of launching their CBDCs. A prime example is Nigeria, which successfully introduced its CBDC, the eNaira, in October 2021, marking a significant stride in the CBDC landscape.
Nations Actively Involved in CBDC
Let’s dive deeper into the specifics of some nations actively immersed in CBDC development:
China: As a pioneer in CBDC development, China stands out as one of the most advanced nations in this domain. Since 2020, it has been rigorously piloting the digital yuan in multiple cities. Although currently accessible to a limited user base, the Chinese government has ambitious plans to roll it out to the general public in the near future.
United States: The United States is also actively pushing the boundaries of CBDC innovation. The Federal Reserve Bank of New York is leading a prominent project to create a wholesale CBDC, primarily aimed at facilitating interbank settlements. Additionally, deliberations are ongoing about the potential development of a retail CBDC, with a formal decision yet to be made.
European Union: Within the European Union, the European Central Bank (ECB) is actively exploring the feasibility of issuing a digital euro. While the ECB has not reached a final decision on launching a digital euro, it has embarked on a thorough two-year investigation to assess the potential benefits and risks associated with such a move.
United Kingdom: The Bank of England is a key player in the CBDC realm, currently engaged in the development of a prototype for a retail CBDC. Collaborating closely with the government and relevant stakeholders, the Bank of England is actively exploring the prospects of introducing a retail CBDC.
Singapore: The Monetary Authority of Singapore is leaving no stone unturned in the pursuit of CBDC innovation. It is in the process of creating a prototype for a wholesale CBDC and is working in tandem with financial institutions to explore the possibilities. A formal decision on the launch of a wholesale CBDC is still under consideration.
Conclusion
These examples represent a fraction of the global efforts to usher in the era of CBDCs. Many other nations are diligently examining the potential of issuing their CBDCs, suggesting that the landscape of digital currencies is poised for substantial growth in the coming years.
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