Central bank digital currencies show momentum growth, research finds
A total of 134 countries, representing 98 percent of the global economy, are currently exploring digital versions of their currencies. Nearly half of these countries are in advanced stages, with pioneers like China, the Bahamas and Nigeria beginning to see increased adoption.
The research, published on Tuesday by the US think tank Atlantic Council, found that all G20 countries are now looking at central bank digital currencies (CBDCs), as they are known, with a total of 44 countries experimenting with them. That’s up from 36 a year ago and is part of a global effort by authorities to respond to the declining use of cash and the threat to their money-printing businesses from companies such as bitcoin and “Big Tech”.
Josh Lipsky and Ananya Kumar of the Atlantic Council said one of the most notable developments this year has been the significant increase in CBDCs in the Bahamas, Jamaica and Nigeria, the only three countries to have launched one.
Also in China, where the world’s largest pilot project is underway, use of the e-CNY prototype has nearly quadrupled to 7 trillion yuan (US$987 billion or about Rs 82,75,511 crore) worth of transactions, officials said.
“There has been a narrative that the countries that have launched CBDCs have seen low or no adoption, but in recent months we have seen a real uptick,” Lipsky said.
“I predict that the PBOC (the Chinese central bank) will be almost fully operational in a year,” he added.
Other major steps forward include the launch of a multi-year pilot for a digital euro by the European Central Bank and the participation of the United States, which has long hesitated about a digital dollar, in a cross-border CBDC project with six other major central banks.
The bank still lags far behind almost all other major banks, but Lipsky stressed that it is one of the countries where concerns about privacy and other aspects of CBDCs are loudest.
In May, the U.S. House of Representatives passed a bill that would ban the direct issuance of a “retail” CBDC — the type used by the public. The Senate has yet to take action, but it remains a hot topic in the presidential election campaign between Donald Trump and Kamala Harris.
Since the Russian invasion of Ukraine and the sanctions imposed by the G7, the number of wholesale bank-to-bank CBDC projects has more than doubled to 13.
The fastest growing, codenamed mBridge, connects CBDCs from China, Thailand, the UAE, Hong Kong and Saudi Arabia and is expected to expand to more countries this year.
Russia is unlikely to be among them, but thanks to the digital ruble pilot, it is now accepted in the Moscow metro and at some gas stations. Iran is also working on a digital rial.
“Whatever happens with the US elections, the Fed will be years behind,” Lipsky said.
© Thomson Reuters 2024
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)