11 countries already have digital currency. Who else will launch a CBDC in the near future
Date: 2023-06-29 Author: Karina Ziganova Categories: BUSINESS
130 states, or 98% of all countries in the world, are interested in the possibilities of the state digital currency. It already exists in 11 countries.
As of June 2023, the central bank's digital currency (CBDC) is used in 11 countries. Another 53 states, including Russia, are at the stage of pilot launch or development, and 46 countries are actively studying this topic. These figures are cited by the Atlantic Council.
11 states with their own CBDC:
Bahamas: sand dollar, launched in 2019, has 303,785 coins in circulation, used by 7.9% of the population. Since the beginning of the pilot, the popularity of CBDC has tripled.
Jamaica: JAM-DEX is available to citizens from June 2022, the government hopes to save millions of dollars in printing and storing paper money.
Nigeria: The e-Naira has been available to retail customers since August 2022.
Countries that are members of the Organization of Eastern Caribbean States: DCash is officially available in the Caribbean as of March 31, 2021. In January 2022, there was a large-scale system failure. It took three months to recover
Saint Vincent and the Grenadines
Grenada
Dominica
Montserrat
Saint Kitts and Nevis
Antigua and Barbuda
Anguilla
Saint Lucia
The first CBDC – the sand dollar – appeared in 2019 in the Bahamas. In four years, 10 more countries have emerged using their own digital versions of the currency, and the pace of transition from pilot to operation has increased dramatically over the past two years.
In June 2021, only six island nations in the Caribbean introduced this type of digital currency. Nigeria introduced the e-naira in October 2021, and by July 2022, four more Caribbean island nations had joined the CBDC camp.
Who is almost ready for a CBDC
The reduction in cash turnover, as well as the desire of states to close the technology of digital money on themselves, stimulate the global development of CBDCs. According to the study, 53 countries are preparing to launch CBDCs in the next three years. China's digital yuan pilot already reaches 260 million people and is used in 200 different scenarios, including e-commerce, benefits, and government payments.
In 2023, Australia, Thailand, South Korea and Russia also plan to test CBDCs in the retail segment, while the Russian digital ruble may appear in 11 pilot cities as early as July.
Another incentive for the introduction of CBDC experts call financial sanctions against countries such as Russia and Venezuela.
"Since the start of the military conflict between Russia and Ukraine, as well as the retaliatory sanctions of the Group of Seven, the number of CBDC developments has doubled," the Atlantic Council said in a report.
Even Europe, a longtime U.S. ally, wants to make sure it has an alternative to the Visa, Mastercard and SWIFT payment networks.
Cross-border CBDC projects
Most of the digital currencies of Central Banks can only be used for settlements in the territory of the home country. However, some states are developing cross-border projects. For example, in September 2021, the central banks of China, Thailand, Hong Kong and the United Arab Emirates, together with the Bank for International Settlements, launched a pilot version of mBridge, a project that will provide interbank interaction between CBDCs of participating countries.
The European Union is developing a legal framework for a digital euro. A decision on the single European digital currency is expected to be made in October 2023.
Who else is involved in cross-border CBDC projects:
France and Switzerland together with the Bank for International Settlements – Jura project together with the Bank for International Settlements
Australia, Singapore, Malaysia and South Africa – Danbar Project
Israel and Hong Kong together with the Bank for International Settlements – Sela project
Israel, Norway and Sweden together with the Bank for International Settlements - Icebreaker project
France, Switzerland and Singapore together with the Bank for International Settlements – Mariana project
France and Singapore – Onyx Project
Great Britain together with the Bank for International Settlements - Rosalinda project
Hong Kong together with the Bank for International Settlements – Aurum project
Switzerland together with the Bank for International Settlements – Helvetia project
Canada, the United Kingdom and Singapore – the Jasper project
Saudi Arabia and the United Arab Emirates – Aber Project
Scandinavian countries – Polaris project
Eurozone, Malaysia, Singapore, Indonesia, Philippines, Thailand – Nexus Project
U.S. & Singapore – Cedar Project
What's wrong with CBDC
Unlike conventional cryptocurrencies such as Bitcoin, transactions with central bank digital currencies are not necessarily carried out over a decentralized protocol. In addition, they are fully controlled by the organization or agency that issued them, for example, the Central Bank.
CBDCs are not intended for financial speculation, but to, for example, simplify and reduce the cost of electronic payments, as well as give access to cashless opportunities to people who, for various reasons, cannot use banking services. Now a significant part of these tasks is solved by conventional digital and mobile payment solutions. However, they tend to be in the hands of private companies.
The central bank's digital currency has its drawbacks. In particular, they are particularly vulnerable to cybercrime, and effective regulation of new technology can require enormous administrative, financial and legal efforts. Some critics also consider CDBC to be prestigious projects with no practical use. The pace of mass adoption also appears uncertain.
