03 Jul 2023 Marsha Tusk
Almost All Economies Are Exploring Potential CBDC Usage
130 nations are studying the potential of central bank digital currencies (CBDC), according to new research from the American Atlantic Council, with cross-border payments driving the initiative.
98 percent of the world's economy, according to a Reuters article, is working on CBDC development, a development that experts say might have significant effects on the financial ecosystem. According to the research, all G20 countries, with the exception of Argentina, are making varied degrees of progress toward the start of CBDCs.
The lack of uniformity among central banks is a recurring theme in CBDC studies. While some bank regulators are interested in learning more about the potential of wholesale CBDCs, others are willing to focus on their retail counterparts or to balance both classes.
To prevent potential complications, certain central banks, including the Reserve Bank of India (RBI), have declared that they will create CBDCs gradually. To get around sanctions, the Bank of Russia has chosen to up the ante on CBDC development.
The survey noticed a notable increase in CBDC interest on a worldwide scale after Western nations imposed economic sanctions on Russia as a result of its invasion of Ukraine. Central banks have completed various joint studies on the functionality and are particularly interested in employing CBDCs to enhance the current status of cross-border transactions.
According to the Atlantic Council, "wholesale CBDC developments have doubled since Russia's invasion of Ukraine and the G7 sanctions response."
A few countries, including Jamaica and Nigeria, have already introduced their CBDCs, but other nations are attempting to introduce their own versions as adoption rates remain dismal. The European Central Bank (ECB) is targeting a 2028 launch date, while China, Russia, India, and Brazil are edging closer to full-scale rollouts.
International organizations including the G7 and G20 countries, as well as the International Monetary Fund (IMF), have shown a desire to standardize CBDC advances globally. The IMF prepared a handbook to provide technical advice to central banks interested in CBDCs in order to accomplish this goal.
According to Bo Li, the IMF's Deputy Managing Director, "The guidebook will be a compilation of expertise and experience on CBDCs."
“It will be the basis for capacity development and hopefully help countries make as well-informed decisions as possible when taking the major step to design and issue their own CBDC,” Li added.
The G7 promised in April to support developing nations by providing a framework to direct the creation of retail CBDCs for common minimum operating standards.
Europe inching towards digital Euro
The initial steps toward developing a digital version of the euro were taken in 2020, when Christine Lagarde, president of the European Central Bank, floated the notion and the Frankfurt-based organization opened up public comments.
Advocates of digital currency claim that it will complement traditional money and prevent the ECB from leaving a void that other central banks and private, typically non-European, entities may fill.
However, detractors challenge the necessity of a digital euro, banks have issued serious danger warnings, and ECB research revealed that public anxiety was mostly over payment privacy.
The European Commission, the EU's executive body, released a proposal last Wednesday that will serve as the legal basis for the ECB's potential introduction of a digital euro.
In order for the digital Euro to take place, the 27 EU member states as well as the European Parliament must support the final legislation.
If everything goes according to plan, the ECB will formally approve the creation of a digital euro in October, and it is anticipated that it will be usable starting in 2027.central banks International Monetary Fund cryptocurrency news crypto news digital asset digital Europe CBDC