Global economy embraces central bank digital currencies

A total of 134 countries, representing 98 per cent of the global economy, are now exploring digital versions of their currencies, with nearly half at an advanced stage like China.

Research by the US-based Atlantic Council think tank, published on Tuesday, reveals that all G20 nations are investigating central bank digital currencies (CBDCs), with 44 countries currently piloting them, up from 36 last year.

This global trend is driven by declining cash usage and the need to counter the influence of cryptocurrencies and major tech firms.

Notable developments include significant growth in the Bahamas, Jamaica, and Nigeria’s CBDCs, the only three countries to have fully launched them. China’s e-CNY pilot has seen transactions nearly quadruple to 7 trillion yuan ($987 billion).

The European Central Bank has initiated a multi-year digital euro pilot, while the United States has joined a cross-border CBDC project with six other major central banks, despite lagging behind in development.

Privacy concerns and legislative hurdles remain significant in the US, with recent bills addressing the issuance of retail CBDCs.

Since Russia’s invasion of Ukraine, ‘wholesale’ CBDC projects have more than doubled, with the mBridge project connecting CBDCs from China, Thailand, the UAE, Hong Kong, and Saudi Arabia.

Russia’s digital rouble pilot is now operational in Moscow’s metro and some petrol stations, while Iran is developing a digital rial.

Despite these advancements, the US Federal Reserve remains years behind, according to the Atlantic Council’s Josh Lipsky.