New research from U.S.-based Atlantic Council has revealed that 130 countries are researching the prospects of central bank digital currencies (CBDC), with cross-border payments fuelling the drive.
According to a Reuters report, the new data indicates that 98% of the global economy is working on CBDC development, a move that experts say could have far-reaching consequences for the financial ecosystem. Per the report, all G20 nations apart from Argentina are inching toward the launch of CBDCS with varying degrees of intensity.
An underlying theme for CBDC experiments is the lack of uniformity among central banks. While some banking regulators are probing into the prospects of wholesale CBDCs, others are content to explore their retail iteration or juggle both classes.
Some central banks, like the Reserve Bank of India (RBI), have stated that they will proceed with a slow-and-steady approach to CBDC development to avoid potential pitfalls. However, the Bank of Russia is opting to increase the ante for CBDC development to circumnavigate sanctions.
The report noted a significant spike in global CBDC interest after Western powers slammed economic sanctions on Russia over its invasion of Ukraine. Central banks are particularly keen on using CBDCs to improve the existing state of cross-border transactions, completing several joint studies on the functionality.
“Since Russia’s invasion of Ukraine and the G7 sanctions response, wholesale CBDC developments have doubled,” the Atlantic Council said.
Another factor fuelling the rapid development of CBDCs is the decline of cash usage since the advent of the COVID-19 pandemic and the fear of “cryptoization” of their local economies.
A handful of nations like Jamaica and Nigeria have launched their CBDC, but while adoption rates continue to falter, other countries are looking to float their own versions. China, Russia, India, and Brazil are inching toward full-scale rollouts, while the European Central Bank (ECB) is eyeing a 2028 launch date.
Valiant attempts at unifying developments
International organizations like the International Monetary Fund (IMF), G7, and G20 nations have indicated a desire to standardize CBDC developments across the board. To further this objective, the IMF published a handbook to offer technical guidance to central banks looking to explore CBDCs.
“The handbook will be a compendium of knowledge and experience on CBDCs, said Bo Li, IMF’s Deputy Managing Director. “It will be the basis for capacity development and hopefully help countries make as well-informed decisions as possible when taking the major step to design and issue their own CBDC.”
In April, the G7 pledged to assist developing countries with a framework to guide the development of retail CBDCs for uniform minimum operating standards.
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