Countries Taking a Look at CBDCs

A Central Bank Digital Currency (CBDC) is digital money backed and issued by a central bank. They are pegged to the value of that country’s fiat currency. Many countries are developing, researching, and considering implementing a CBDC in some form. They are issued and regulated by a nation’s monetary authority. They promote financial inclusion and, in many ways, simply financial transactions. Here are the countries considering CBDCs:

A Closer Look

105 countries, representing 95% of global GDP, are exploring CBDCs. Implementation of CBDCs can be broken down into the following categories: launched, pilot, development, research, inactive, and canceled.

11 countries have launched a digital currency. These include Nigeria, Africa’s most crypto-friendly nation, with its launch in October 2021. Other members include the Bahamas, Jamaica, and eight other Caribbean neighbors.

14 countries are in the pilot stage of launch. Most notably, China’s pilot is set to expand dramatically in 2023. Apart from China, included in this stage are Russia, Sweden, Ukraine, Saudi Arabia, South Africa, Singapore, Thailand, Malaysia, Kazakhstan, and South Korea.

Around 26 countries fall into the development stage. The development stage is characterized as an initial technical build and early stage testing of CBDCs in controlled environments. 19 of the G20 participants are exploring a CBDC, with 16 already in development or pilot stages. Countries in this stage include: Canada, Haiti, Belize, Venezuela, Brazil, Mauritius, Australia, India, Bhutan, Indonesia, Iran, Turkey, Cambodia, Japan, Bahrain, and much of Europe.

By far the largest category are those in research. The United States, most notably, falls into this category. So does the United Kingdom. Out of the G7, this puts the U.S. and U.K. the farthest behind in CBDC development. Within this category are also Mexico, Guatemala, Honduras, Chile, Colombia, Iceland, Norway, Morocco, Ghana, Madagascar, along with many other south African countries. It also includes a bulk of eastern Europe, including Hungary and the Czech Republic, Middle Eastern countries such as Oman, Qatar, and Kuwait, and China’s southern neighbors, Nepal, Bangladesh, Myanmar, Laos, and Vietnam, among others.

Inactive status is granted to countries that have stated their interest in pursuing CBDCs but have made no real effort to do so. Countries also fall into this category if they previously stated they have no interest in pursuing a CBDC at all. There are ten countries in this category, including Argentina, Curacao, Bermuda, Egypt, North Korea, Azerbaijan, and Denmark.

Finally, a cancelled project indicates that the project failed or was decommissioned. Only two countries fall into this category: Ecuador, and Senegal. The Ecuadorian Central Bank launched a CBDC, the Sistema de Dinero Electronico (SDE) in 2014. Due to low levels of trust in the central bank, the project failed and was cancelled in 2017. The West African Economic and Monetary Union (WAEMU) used Senegal as a testing ground for CBDCs in 2016. Early in development thought, WAEMU withdrew support and the project failed shortly thereafter.

Cross Border Projects

The implementation of multiple CBDC projects creates an interoperability problem in the future. International standard setting in important, but cross border projects could also solve this problem. Here are the cross border CBDC projects under production:

Multiple CBDC Bridge (mBridge)

In 202021, the Bank of International Settlements (BIS) in conjunction with Thailand, Hong Kong, China, and the UAE released a report on phase two of the mBridge project. The project seeks to create a multiple CBDC integration for faster and cheaper transactions and foreign exchange operations.

Project Dunbar

Australia, Singapore, Malaysia, and South Africa, in collaboration with BIS, are exploring a platform for international settlements. In March 2022, the project brought two prototypes to allow international settlements across multiple CBDCs.

Project Helvetia

In collaboration with the Swiss National Bank, the BIS and commercial operator, SIX, created Project Helvetia. The goals was to explore the feasibility of issuing wholesale CBDCs (wCBDC) onto SIX’s distributed asset platform. In 2022 it was announced that the project was successful in bringing the wholesale CBDCs to the core banking structure in Switzerland.

Project Jasper

Jasper was launched in 2017 by the Bank of Canada. Over four phases, the project tested cross-border CBDCs with the Bank of England and the Monetary Authority of Singapore.

Project Aber

In 2019, Project Baer was launched as a bilateral CBDC pilot between the UAE and Saudi Arabia. It sought to study decentralized ledger technology, and concluded that it could successfully facilitate cross-border transactions.

Project Jura

The BIS, with Banque de France, and Swiss National Bank launched Project Jura. Led by Accenture, the project conducted an experiment using wCBDCs for cross border settlements on distributed ledger technology.

Onyx/Multiple wCBDCs

In 2021, Banque de France announced that, in conjunction with the Monetary Authority of Singapore, they successfully completed a cross-border payment using JP Morgan’s Onyx unit.

Special thank you goes to the Atlantic Council, who’s GeoEconomics Center has developed a brilliant Global CBDC tracker. If you’re interested in following their work, check out this link.

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