Global increase in CBDC exploration leaves US lagging behind

An Atlantic Council study published on Thursday found that 134 countries, or 98% of global gross domestic product (GDP), are currently exploring the possibility of a central bank digital currency (CBDC). This number has increased from just 35 since May 2020.

Currently, 68 countries are in advanced stages of exploration, which includes development, pilot or launch phases. It is notable that most G20 countries, with the exception of Argentina, are at an advanced stage, with 11 of them already in the pilot phase. These countries include Brazil, Japan, India, Australia, South Korea, South Africa, Russia and Turkey.

In contrast, developments regarding a retail CBDC in the US have stopped. Federal Reserve Chairman Jerome Powell recently told the Senate Banking Committee that the Fed has no immediate plans to introduce such a currency. “People don’t have to worry about a central bank digital currency. Nothing like this is about to happen anytime soon,” he said.

Lawmakers have raised concerns about the privacy of U.S. citizens, which has complicated efforts to implement the digital dollar.

China’s Digital Yuan (e-CNY) stands out as the largest CBDC pilot project globally. With its widespread adoption, the e-CNY has reached 260 million wallets in 25 cities.

Meanwhile, the European Central Bank (ECB) is actively developing the CBDC and is aiming for a launch in 2025. This includes conducting practical tests and trials to ensure the functionality and security of the digital euro.

To date, only three countries have successfully launched a CBDC: the Bahamas, Jamaica and Nigeria. The 8-country Eastern Caribbean Currency Union experienced technical difficulties with its DCash initiative and has consequently suspended its availability. The union is now developing a new pilot program.

Currently, no country among the BRICS nations (Brazil, Russia, India, China and South Africa) has fully launched one. Instead, these countries are in the pilot phase. Additionally, new BRICS members such as Saudi Arabia, Iran and the UAE are also exploring cross-border wholesale CBDCs. Notably, BRICS has been actively promoting the development of an alternative payment system to the dollar since last year.

Following the Russian invasion of Ukraine, there has been a notable increase in the development of cross-border wholesale CBDCs. There are currently 13 cross-border wholesale CBDC projects underway. In particular, mBridge, which connects China, Thailand, the UAE and Hong Kong, is about to enter a new phase and expand to 11 additional countries this year.