Study: Global Favor for CBDCs

A recent assessment by the Atlantic Council revealed an interesting trend of growing global interest in central bank digital currencies (CBDCs). The research found that the exploration of CBDC as a new field of economic digitization is prevailing. Of these countries, 11 are leading this financial revolution by fully rolling out CBDCs, with China leading the way.

Three-Year Overview: The Escalating Digital Currency Race

The study estimates that 95 countries have joined the CBDC race over the past three-year period, suggesting that global interest in these digital currencies is accelerating. Currently, 130 countries have launched various initiatives in this field, including major developed economies such as Japan, South Korea, Australia, and the United Kingdom.

Interestingly, most countries (46) are in the research phase of this journey, while 21 countries have started pilot testing.

Six-Month Progress Report: G20 Countries and CBDC

Over the past six months, almost all G20 countries have made significant progress. The Atlantic Council report highlights new resource infusions and substantial progress in these CBDC projects.

Certain countries are showing a firm will to digitize their official currencies. These countries include China, Nigeria, the Bahamas, Jamaica and the Caribbean islands.

China, in particular, has made significant progress in promoting the digital yuan, such as the inclusion of digital yuan payments during the 2022 Winter Olympics in Beijing.

In contrast, however, the study notes that the development of a retail CBDC in the United States has stagnated. But at the same time, the country has made progress 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 wholesale CBDC development.

Prototypes that keep popping up around the world

Leading economies such as Japan and the UK are pushing boundaries, developing CBDC prototypes and considering public consultations on potential CBDC launches.

Likewise, the European Central Bank hinted at the launch of a digital euro, and the European Commission revealed more about the project, portraying it as a broad payment solution for both online and offline transactions.

Brazil and India plan to launch their respective CBDCs in the coming year, and financial organizations such as Mercado Bitcoin, Sinqia and Genial are also involved in the Brazilian project.

Motivation behind CBDC

Although motivated differently, the Atlantic Council speculates that a CBDC could encourage financial inclusion, provide monetary access to the unbanked, stimulate competition in domestic money markets, improve settlement efficiency, and minimize transaction costs.

In contrast to cryptocurrencies, CBDCs are centrally issued and regulated, posing a potential threat to personal privacy. Prominent figures such as Florida Governor Ron DeSantis and U.S. presidential candidate Robert F. Kennedy have voiced these concerns, describing CBDCs as potential tools for surveillance and oppression.