A recent evaluation by the Atlantic Council disclosed an intriguing trend – a growing global interest in Central Bank Digital Currencies (CBDCs). The study found a prevailing exploration of CBDCs as a new frontier in economic digitalization. Among these countries, 11 pioneered this financial revolution by fully launching their CBDCs, with China leading the charge.
The Escalating Digital Money Race: A Three-Year Overview
In the past triennial period, the study estimates that an impressive 95 countries have enlisted in the CBDCs race, showing the accelerating pace of global interest in these digital currencies. At present, 130 nations have instigated various initiatives in this field, encompassing major developed economies like Japan, South Korea, Australia, and the UK.
Interestingly, most countries (46) are at the research stage of this journey, while 21 nations have leapt into launching pilot tests.
G20 Countries & CBDCs: A Six-Month Progress Report
Over the past half-year, significant strides have been noted among almost every G20 nation. The Atlantic Council report underscores an infusion of new resources and substantial progress in these CBDC projects.
Certain countries are displaying resolute intent to digitize their official currencies. These include China, Nigeria, the Bahamas, Jamaica, and the Caribbean islands.
China, in particular, has made significant headway in promoting the digital yuan, with initiatives like incorporating digital yuan payments during the 2022 Winter Olympic Games held in Beijing.
However, in contrast, the study noted a stagnation in the progression of retail CBDCs in the USA. But simultaneously, the country has advanced in developing a wholesale, bank-to-bank, CBDC. Interestingly, geopolitical events such as Russia’s invasion of Ukraine and subsequent G7 sanctions have reportedly spurred the development of wholesale CBDCs.
Emerging Prototypes Around The World
Leading economies like Japan and the UK are pushing their boundaries, developing CBDC prototypes and considering public consultation on potential CBDC releases.
Similarly, the European Central Bank is hinting at introducing a digital euro, with the European Commission divulging more about the project, painting it as a broad-ranging payment solution for online and offline transactions.
Brazil and India plan to introduce their CBDCs in the coming year, with financial organizations like Mercado Bitcoin, Sinqia, and Genial roped in for the Brazilian project.
The Motivation behind CBDCs
While motivations differ, the Atlantic Council speculates that CBDCs could encourage financial inclusivity, granting monetary access to the unbanked population, stirring competition in domestic monetary markets, enhancing settlement efficiency, and minimizing transaction fees.
Contrasting with cryptocurrencies, CBDCs are centrally issued and regulated, posing potential threats to personal privacy. High-profile individuals such as Florida Governor Ron DeSantis and US Presidential candidate Robert F. Kennedy have flagged these concerns, characterizing CBDCs as potential tools for surveillance and oppression.
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