Central bank digital currencies gain momentum, study shows

A total of 134 countries, representing 98% of the global economy, are currently exploring digital versions of their national currencies, with nearly half of them in the late stages, while pioneers such as China, the Bahamas and Nigeria are beginning to see a resurgence in usage.

All G20 countries are now studying central bank digital currencies (CBDCs), with a total of 44 countries conducting pilots, according to research released by the Atlantic Council think tank on Tuesday. That’s 36 more than a year ago, part of a global effort by authorities to respond to declining cash use and threats to their money-printing power from bitcoin and “big tech” companies.

One of the most notable developments this year has been the surge in CBDCs in the Bahamas, Jamaica, and Nigeria, three countries that have already launched CBDCs, according to Josh Lipsky and Ananya Kumar of the Atlantic Council.

China is also running the world’s largest pilot, with usage of its prototype e-yuan growing nearly fourfold to 7 trillion yuan ($987 billion, Rs 82,755.11 lakh crore), officials said.

“There were rumors that countries launching CBDCs had low or no usage, but over the last few months we’ve seen real growth,” Lipsky said.

He added: “I predict that the People’s Bank of China (PBOC) will be close to full launch in a year.”

Other major developments include the European Central Bank launching a multi-year digital euro pilot and the United States, which has long delayed on the issue of a digital dollar, joining the cross-border CBDC project with six other major central banks.

While it still lags far behind almost all other leading banks, Lipsky stressed that it is among the countries with the strongest privacy and other concerns about CBDCs.

In May, the U.S. House of Representatives passed a bill that would ban the direct issuance of “retail” CBDCs (i.e. the type used by the public). The Senate has yet to act, but it remains a hot topic in the presidential campaign between Donald Trump and Kamala Harris.

Since Russia’s invasion of Ukraine and the imposition of G7 sanctions, the number of interbank-only “wholesale” CBDC projects has more than doubled to 13.

The fastest-growing project, codenamed mBridge, connects the CBDCs of China, Thailand, the UAE, Hong Kong and Saudi Arabia, and is expected to expand to more countries this year.

Russia is unlikely to be one of them, but its digital ruble pilot means it is now accepted on the Moscow metro and at some gas stations. Iran is also working on a digital rial.

“Whatever the outcome of the U.S. election, the Fed is already years behind the times,” Lipsky said.