Not only is the fintech space evolving, so are the economies of nations. Therefore, every nation and government are trying to catch up. Despite the expectations that CBDC is a win for cryptocurrency, it seems more as a means to circumvent cryptocurrency by the government. It seems to help them have more control over the financial instruments and better monetary policies that favor their economies and not the community. A look at one of the reasons for a digital yaun also known as DCEP, will affirm this claim.
The purpose of this article is not to criticize CBDC, but to highlight the growing list of countries supporting it. Therefore, before citing the list of CBDCs, let’s start with the definition.
What is CBDC?
Central Bank Digital Currency (CBDC), according to Wikipedia, is “A high-security digital instrument; like paper banknotes that fulfills the three functions of money: a means of payment, a unit of account, and a store of value. And like paper currency, each unit is uniquely identifiable to prevent counterfeit.” Look at CBDC as a digital form of fiat money and a cryptocurrency backed by the state. However, note that all CBDC may not necessarily be in the form of cryptocurrency.
The concept of digital currency is not new, as it can be traced back to the early 1990s, as we previously discussed in this article. However, FedCoin in 2014, marked the first significant approach. In reaction to FedCoin, JP Koning said: “The main reasons that the Fed would implement Fedcoin would be to provide the public with an innovative and cheap payment option and to provide the taxpayer with tax savings.”
Through a report, the Bank of Settlement says that the importance of CBDC is not debatable, but there are factors worth considering. According to them, these factors include interest in technological innovations for the financial sector, the emergence of new entrants into payment services and intermediation, declining use of cash in select countries, and increasing attention to so-called private digital tokens.
Who Will Support CBDC Next?
Before listing the countries or governing bodies currently interested in CBDC, it is necessary to bring to your attention how Six Central Banks Form Working Group to Assess Central Bank Digital Currencies. The development was conveyed through a press release, titled: Central Bank Group to Assess Potential Cases for Central Bank Digital Currencies, issued on January, 21. The motive of the alliance is to study the use cases of CBDC, economic, functional, and technical design choices, including cross-border interoperability and the sharing of knowledge on emerging technologies. Accordingly, the six central banks are the Bank of Canada, Bank of England, Bank of Japan, European Central bank, Sveriges Riksbank, the Swiss National Bank, and the Bank for International Settlements (BIS).
Other governments working on CBDC who are not among the six mentioned above, include China, United Kingdom, Cambodia, The Eastern Caribbean Central Bank (ECCB), the International Monetary Fund (IMF), the United State, and others.
Okereke has a passion for researching blockchain and cryptocurrency. He enjoys creating long form educational content to inform others on the opportunities in this space.