According to a recent study conducted by the Atlantic Council, digital currencies have garnered significant attention worldwide, with 130 countries, representing 98% of the global economy, currently exploring the development of their own central bank digital currencies (CBDCs).
The study further highlights that nearly half of these nations are in advanced stages of development, pilot testing, or preparing for launch.
The research, published by the U.S.-based think tank on Wednesday, indicates substantial progress over the past six months, with all G20 countries, excluding Argentina, now being in advanced phases of CBDC development. The report underscores the expanding interest in digital currencies, as governments recognise the need to adapt to evolving financial landscapes and combat challenges posed by cryptocurrencies and tech giants.
“Since Russia’s invasion of Ukraine and the G7 sanctions response, wholesale CBDC developments have doubled,” the Atlantic Council stated, emphasising the geopolitical factors driving the adoption of CBDCs.
Notably, eleven countries, including several Caribbean nations and Nigeria, have already launched their CBDCs. China, in particular, has made significant strides, with pilot testing reaching an impressive 260 million people, encompassing diverse scenarios such as e-commerce and government stimulus payments.
India and Brazil, two prominent emerging economies, have expressed plans to join the CBDC wave, aiming to launch their digital currencies next year. Meanwhile, the European Central Bank is on track to commence a digital euro pilot, with a potential rollout anticipated in 2028. Additionally, over 20 countries are taking substantial steps toward conducting their own CBDC pilots this year.
However, the progress of CBDC development varies across nations. In the United States, the Atlantic Council’s research revealed that while progress is being made on a wholesale digital dollar, work on a retail version, intended for wider public use, has stalled. President Joe Biden had previously directed officials to assess the risks and benefits of a digital dollar in March 2022.
“The heavyweight status of the dollar in the financial system means any U.S. move has potentially enormous global consequences,” the report noted. It further emphasised that the decision to launch a digital dollar should lie with Congress rather than the Federal Reserve.
As the world witnesses a decline in physical cash usage, the exploration of CBDCs serves as a strategic measure to safeguard monetary sovereignty and counter the growing influence of decentralised cryptocurrencies and tech behemoths. Nonetheless, some countries that have already launched their CBDCs, such as Nigeria, have experienced disappointing adoption rates, while others, including Senegal and Ecuador, have abandoned their development efforts.
While the digital currency landscape continues to evolve, countries worldwide are forging ahead with exploring and implementing CBDCs, navigating the complex economic and technological challenges along the way.