Central Banks are on the Way: 130 countries exploring central bank digital currencies

A study reveals that 130 nations, which make up 98% of the global economy, are looking into creating digital versions of their own currencies. Almost half of these nations are at the final stages of creating their own digital currencies. All the G20 countries, excluding Argentina, are among these nations.

Eleven countries, including some from the Caribbean region and Nigeria, have already introduced their digital currencies, known as central bank digital currencies (CBDCs). China’s pilot test has reached 260 million people and includes 200 different use-cases, like online shopping and government aid payments.

India, Brazil, and the European Central Bank also have plans to start their digital currencies next year. Over 20 other nations are also planning to take major steps towards pilot tests this year. However, in the United States, progress towards a digital dollar that can be used by everyone has slowed down, while a version for bank-to-bank use is still advancing.

The US President, Joe Biden, in March 2022, asked government officials to analyze the risks and benefits of a digital dollar. Since the US dollar holds a powerful position in the global economy, any decision the US takes can have large-scale global effects.

The need for CBDCs has risen as physical cash use decreases, and governments are concerned about losing control over money printing due to bitcoin and big tech companies. The sanctions put on countries like Russia and Venezuela have also encouraged this shift, as countries want to have an alternative to payment networks like Visa, Mastercard, and Swift.

The Atlantic Council reports that there has been an increase in the development of wholesale CBDCs after Russia invaded Ukraine and was sanctioned by the G7. Currently, there are 12 projects being worked on to enable multi-country digital currencies.

Sweden is leading in Europe with its digital currency pilot, while the Bank of England is also working on a possible digital pound. Other nations like Australia, Thailand, South Korea, and Russia are also planning to continue their pilot tests this year.

However, some countries that have launched their CBDCs, like Nigeria, have seen a lackluster response. Additionally, countries like Senegal and Ecuador have halted their development efforts.