Photo credit: www.gadgets360.com
Global Shift Towards Digital Currencies: Insights and Developments
A growing movement towards digital currencies is taking shape around the world, with 134 countries—accounting for 98 percent of the global economy—actively investigating the implementation of their own digital currencies. Notably, nearly half of these nations are at advanced stages of development, with trailblazers such as China, the Bahamas, and Nigeria beginning to witness increased adoption.
According to a recent study conducted by the Atlantic Council, a think tank based in the United States, all G20 nations are now engaged in the exploration of central bank digital currencies (CBDCs). The research revealed that a total of 44 countries are currently piloting CBDC programs, an increase from 36 reported a year earlier. This initiative is part of a broader global strategy by financial authorities to adapt to the declining use of cash and to address challenges posed by cryptocurrencies like bitcoin and the influence of major technology firms.
Analysts Josh Lipsky and Ananya Kumar from the Atlantic Council noted significant growth in the usage of CBDCs in the Bahamas, Jamaica, and Nigeria, marking these nations as pioneers in this financial evolution, having already launched their digital currencies.
China, leading the charge with the world’s most extensive CBDC pilot, has observed the usage of its digital currency, the e-CNY, rise nearly fourfold, reaching a staggering 7 trillion yuan (approximately $987 billion). This surge reflects a substantial increase in both consumer and commercial transactions, as stated by officials.
“Contrary to earlier perceptions that launched CBDCs have experienced limited uptake, we are now witnessing a genuine increase in their usage,” Lipsky remarked. He further predicted that the People’s Bank of China (PBOC) would be nearing a full rollout of the e-CNY within a year.
In Europe, the European Central Bank has initiated a long-term digital euro pilot, while the United States, which has been relatively slow in advancing a digital dollar, is now participating in a cross-border CBDC collaboration alongside six other prominent central banks.
Despite this progress, the U.S. still trails other leading financial institutions. Concerns regarding privacy and transparency regarding CBDCs have been particularly pronounced in the U.S. political landscape. Recently, the House of Representatives approved legislation that bans the direct issuance of a retail CBDC for public use, though the Senate has yet to take action. This topic is expected to remain a significant issue as the presidential campaign unfolds between candidates Donald Trump and Kamala Harris.
In light of geopolitical tensions following Russia’s invasion of Ukraine and the subsequent G7 sanctions, the number of bank-to-bank ‘wholesale’ CBDC projects has more than doubled to 13. One of the most rapid developments in this space is the mBridge initiative, which links CBDCs from China, Thailand, the UAE, Hong Kong, and Saudi Arabia, with plans for expansion to additional countries.
While Russia is likely excluded from this expansion, it has initiated a digital rouble pilot, which is already accepted for transactions in the Moscow metro and selected gas stations. Similarly, Iran is in the process of developing its own digital rial.
“Regardless of the outcome of the upcoming U.S. election, the Federal Reserve remains significantly behind its global counterparts in the CBDC race,” Lipsky concluded.
Source
www.gadgets360.com