Central Bank Digital Currencies (CBDCs) are rapidly gaining traction in the global financial landscape. As of the second half of 2023, research shows that 130 countries, representing 98 percent of global GDP, are exploring CBDCs. Among them, 64 countries are in advanced phases of exploration, including launch, pilot, or development stages.
Major Developments in CBDCs
European Central Bank (ECB): The ECB has initiated a “preparation phase” for a digital euro, aiming to provide a digital form of cash with offline services, privacy, and instant settlements. This phase is critical for laying the foundations, involving extensive testing and experimentation.
Reserve Bank of Australia: In collaboration with Mastercard, the Reserve Bank of Australia concluded a CBDC blockchain pilot, demonstrating CBDC’s interoperability potential. However, a full-scale CBDC is still a few years away.
Central Bank of Brazil: Brazil is developing its digital real (DREX), focusing on privacy and infrastructure. Its first-phase launch is set for May 2024, aiming to incorporate the CBDC across all financial services.
China’s e-CNY: PetroChina completed an international crude oil trade using the digital yuan, marking a significant step in utilizing CBDC for cross-border transactions.
Reserve Bank of India: India’s CBDC is undergoing a pilot phase, with the goal of one million daily transactions by the end of 2023.
Bank of Japan: The bank launched a forum with 60 companies for a digital yen pilot, focusing on retail settlements.
Nepal Rastra Bank: Nepal announced plans to develop a CBDC despite bans on cryptocurrency and stablecoin activities.
The Philippines: The country is progressing with a wholesale CBDC pilot, aiming to enhance cross-border transactions and mitigate settlement risks.
Bank of Korea: The bank is planning a CBDC pilot test for both retail and wholesale payments.
Swiss National Bank: Partnering with commercial banks for a Swiss franc wholesale CBDC pilot, testing digital securities transactions.
US Digital Dollar: Congressman Stephen Lynch reintroduced legislation to develop a US CBDC, indicating growing interest in the US for a digital dollar.
These developments suggest that CBDCs are more than a fleeting trend; they are becoming integral to the future of global finance. From enhancing cross-border transactions to improving financial inclusivity, CBDCs hold the potential to reshape the financial landscape.