Central Bank Digital Currency Adoption Among Countries Record a 200% Jump in the Last Two Years
- The number of countries considering launching a CBDC has soared.
- The US and the UK are lagging in the adoption of the CBDC.
Several countries are considering or already piloting Central Bank Digital Currency (CBDC). According to an analysis by BanklessTimes.com, the number of countries with central banks working on CBDC has risen. In 2020, 35 countries were exploring CBDC compared to 105 this year. This represents a 200% increase in just two years.
Speaking on the data, Jonathan Merry, CEO of BanklessTimes, said,
CBDCs have the potential to reduce costs, increase efficiency and speed up transactions. They could also help reduce financial crime. However, many challenges must be overcome before CBDCs can be widely adopted. These include technical challenges, such as ensuring interoperability between different systems, and regulatory challenges, such as preventing money laundering and terrorist financing.BanklessTimes CEO Jonathan Merry
What is CBDC?
CBDC is a digital version of a country's fiat currency. It can be used to make electronic payments and exchange for other assets, such as gold or cryptocurrency.
There are several benefits of CBDC. First, it can help to reduce fraudulent activities. Second, it can help to reduce the cost of printing physical money.
Third, it can help to increase financial inclusion by providing access to banking services to those who do not have a bank account.
Some risks associated with CBDC include the potential loss of control by the central bank, increased volatility, and cyberattacks.
Which Countries Are Considering or Have Already Launched CBDC?
So far, ten countries have fully released a CBDC, with China expanding its test program to 2023. In October 2021, Nigeria, Africa's most populous country, introduced the CBDC. Besides, the JAM-DEX CBDC was recently introduced in Jamaica.
The United States and the United Kingdom are the two G7 countries that have made little progress on CBDC. Yet, the European Union Central Bank plans to roll out a digital version of the euro by the decade's midpoint.
Nineteen of the G20 Nations are looking into establishing a CBDC, with another 16 in various stages of development or pilot. Countries including Japan, South Korea, Russia, and India are in this group. Over the past half a year, all have made tremendous strides.
Impact of CBDCs Adoption
CBDCs wide adoption radically alters the global monetary system. With its advent, citizens and enterprises have direct access to a digital currency backed by assets owned by central banks.
Banks function as an intermediary between governments and businesses in investment and savings. So, the financial sector will experience strong effects.
In automated electronic contracts, CBDC could affect a company's treasury policies. Moreover, it presents new options for integrating payment systems with management software and supply chain resources.