There is an ongoing race to build national digital currencies, and a recent IMF report states that around 100 countries are in various stages of developing their CBDCs or central bank digital currencies. India too has officially announced its CBDC plans in the recent budget in 2022, and the Indian CBDC is expected to be introduced next year.
Meanwhile, two countries have already launched their national digital currencies – the JAM-DEX of Jamaica and the Bahamian Sand Dollar (October 2020). Nigeria is among the top countries where cryptocurrencies have gained favour, and its e-Naira is in pilot stage.
India wants to roll out its own CBDC instead of accepting bitcoin, ether or other any other public or private coins. The finance ministers cited a few advantages of having a national digital currency – it will further give a push to digital economy, and will create a currency system that is cheaper and more efficient.
Which countries around the world are working on CBDCs, and why?
Here is the latest map:
The IMF report says the for the Bahamas, which as a network of islands spread across the sea, the motive was to create an accessible monetary system for the unbanked population. In Nigeria, easy remittance and cross-border payments are among the major goals.
France is among the few countries which has launched the pilot CBDC. Their experimentation began in 2016 as a proof of concept to test the capabilities of a DLT, or distributed ledger, in financial markets. Its pilot is aimed at testing the inter-operability of the DLT for transferring data and digital assets, and to check how multiple environments can co-exist.
Other CBDC Pilots are running in – Canada (Jasper), Uruguay (e-Peso), Ghana, Tanzania and South Africa, Saudi Arabia (Aber), and China (e-CNY).
Some major countries at the proof-of-concept stage are – Russia, Brazil, Australia, New Zealand, Thailand, Iran, Norway and Ukraine.
According to the IMF report, “leading experts argue that CBDCs can create greater resilience for domestic payment systems and foster more competition, which may lead to better access to money, increase efficiency in payments, and in turn lower transaction costs.”
The report also goes on to cite some potential risks of CBDCs:
- Extremely high number of withdrawals from banks to buy CBDC
- Risk of cyberattacks on central banks
- Leak of data, flaws with financial integrity
The CBDC Tracker is an open-source project aimed at providing a comprehensive information resource for world CBDC initiatives. The status of central bank currencies can tracked on this dedicated website: https://cbdctracker.org/
The IMF report can be accessed at: https://www.imf.org/en/Publications/fandd/issues/2022/09/Picture-this-The-ascent-of-CBDCs
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