Which countries are leading the way in CBDC exploration and R&D?
Original source: PwC Global CBDC Index Report
Article arrangement: Baize Research Institute
On Monday, the global accounting firm PricewaterhouseCoopers released the annual index report on central bank digital currency (CBDC) and stable currency. The company’s analysts pointed out in the report that more than 80% of the world’s central banks are considering or have launched CBDC; At the same time, stablecoins are becoming complementary to the existing payment ecosystem, with a market capitalization of around $190 billion by early 2022.
PwC's Global CBDC Index is based on data from the Bank of International Settlements, central bank websites, Atlantic Council, media, Google Trends, Baidu Index, and aims to measure the maturity of central banks in deploying their own digital currencies.
PwC believes that CBDC will not only facilitate more efficient, lower-cost and 24/7/365 payments in the financial services industry, but will also benefit cross-border transactions and cross-border economies in all relevant jurisdictions. The report divides CBDC into two frameworks, one is retail CBDC, which is a digital currency for public use, and its maturity is higher than the other framework - wholesale CBDC, which is for those with accounts in the central bank Digital currency used by financial institutions.
Overall, more than 80% of central banks are considering or have launched a CBDC. For example, the Bahamas and Nigeria are already using legal digital currencies, and Jamaica and the Eastern Caribbean are expected to follow soon. The People's Bank of China started moving towards a digital renminbi in 2014 and is currently conducting large-scale trials in some cities, and it has also become one of only three payment methods accepted by venues during the 2022 Beijing Winter Olympics.
However, CBDCs, whether retail or wholesale, can be monitored and controlled, and while this may not be a more desirable feature, it turns out that criminals can indeed use various types of "Money" for bad things, helping to track and Preventing such things from happening is essential. However, more transparent and simpler CBDC operations are necessary.
Relatively speaking, privately issued stablecoins offer an alternative and offer most of the same utilities as CBDCs, such as transportability, continuous settlement, traceability, cross-border interoperability, and Low transaction fees and programmability of facilities without limitations. In the simplest sense, a stablecoin is a cryptocurrency that is collateralized on a one-to-one basis (e.g., a fiat currency deposit held by a regulated third-party custodian). This means that it is state-backed to the extent that deposits are insured.
However, despite the great opportunity for stablecoins, they still face regulatory challenges criss-crossing countries around the world. This was recently demonstrated by Facebook's sale of Diem to Silvergate.
first level title
image description
nigeria
Name: eNaira
Index: 95
Region: Africa (No. 1 in Africa)
Important information:
In October 2021, Nigeria became the first African country to launch a CBDC - eNaira, issued by the Central Bank of Nigeria as legal tender. To strengthen the payments ecosystem and drive financial inclusion, eNaira's design is based on seven key principles: Inclusive Economy, Innovation, Efficiency, Resilience, Nigeria Proudly, Scalability and Transparency. A phased approach is taken to implement the use cases required by eNaira, including the planned release of Unstructured Supplementary Service Data (USSD) and offline payment options in the short to medium term.
Statistical data:
Currently, the eNaira Payment Wallet App has been downloaded about 700,000 times, covering more than 160 countries/regions around the world, of which about 660,000 wallets have been created. The total transaction volume was 35,000, 90% of which were between individuals and businesses.
Name: Sand Dollar
Index: 92
Region: Americas (No. 1 in the Americas)
Important information:
China
Name: e-CNY
Index: 87
Region: Asia (No. 1 in Asia)
Important information:
In 2020, China became the first major economy to pilot a CBDC. In March 2022, the pilot will be launched in 12 cities including Beijing and Shanghai, and it is planned to expand to at least 11 cities. The purpose of e-CNY launch is to improve the convenience, efficiency and flexibility of the retail payment system, and further strengthen the currency sovereignty and internationalization of RMB.
Statistical data:
At present, the total number of e-CNY wallets created is about 260 million, and the total transaction volume exceeds 13 billion US dollars.
Name: Jam-Dex
Index: 81
Region: Americas (Second in Americas)
Important information:
In May 2020, the Bank of Jamaica announced plans to develop a CBDC and invited CBDC providers to develop and test potential solutions. In 2021, the Central Bank of Jamaica completed an 8-month pilot, procuring the services of eCurrency Mint and minting the country's first CBDC, totaling 230 million Jam-Dex (test). In March this year, the Central Bank of Jamaica announced that it will officially issue Jam-Dex in April.
Name: DCash
Index: 80
Region: Americas (3rd in Americas)
Important information:
Ukraine
Name: e-hryvnia
Index: 71
Region: Europe (3rd in Europe)
Important information:
The National Bank of Ukraine launched the first CBDC pilot in September 2018. During the pilot, it issued 5,443 e-hryvnia and tested it up and running. In 2021, following expert surveys, the National Bank of Ukraine announced three potential research areas for e-hryvnia, including payments, transactions with the cryptocurrency sector, and cross-border payments. In July 2021, the President of Ukraine signed the "Payment Services" bill, allowing the National Bank to issue a CBDC. Currently, Ukraine’s Ministry of Digital Transformation is still testing the underlying technology.
Name: e-peso
Index: 71
Region: Americas (4th in Americas)
Important information:
In 2018, the Central Bank of Uruguay completed a six-month CBDC pilot. During the pilot, the central bank issued about US$20 million of e-peso for 10,000 users to test peer-to-peer payments and offline payments between individuals and businesses. After the pilot, all e-peso will be destroyed. Currently, the country’s central bank has not announced the continuation of CBDC development, and according to the International Monetary Fund, resource constraints are one of the key reasons why Uruguay has not yet launched another pilot.
name: none
Index: 69
Region: Asia (Second in Asia)
Important information:
In August 2021, the Bank of Thailand announced a CBDC development and testing plan. Unlike other CBDCs, Thailand's CBDC plans to expand innovative use cases and allow private sector and technical personnel to participate. The test is expected at the end of 2022, but the Bank of Thailand has not announced the test content or participation criteria.
Name: e-krona
Index: 61
Region: Europe (Second in Europe)
Important information:
The Riksbank first launched its CBDC e-krona in 2017 to analyze demand for e-krona among the country's population. In 2019, the Riksbank tested an e-wallet. However, since six Swedish banks jointly developed a digital payment application Swish, less than 10% of payments in the country were made in cash, so e-krona was not issued.
South Korea
name: none
Index: 61
Region: Asia (3rd in Asia)
Important information:
In May 2021, the Bank of Korea announced a simulation test of the feasibility technology of CBDC. The main goal is to test whether CBDC can be used as currency and explore its potential commercial use. The pilot began in August 2021 and is expected to run until June this year. The first phase of testing has ended, which mainly explores the basic functions of CBDC, including manufacturing, issuance and distribution in a simulated environment. According to the Bank of Korea, the CBDC works normally under the test conditions.
first level title
image description
Index of Top 10 Wholesale CBDCs
Name: Inthanon-LionRock (mBridge)
Index: 81
Region: Asia (No. 1 in Asia)
Important information:
In 2019, the Hong Kong Monetary Authority and the Bank of Thailand jointly launched a project called Inthanon-LionRock to test the application of CBDC in cross-border payments. The project demonstrates the viability of a common CBDC platform between the two jurisdictions by testing key features such as transaction privacy, foreign exchange matching, monitoring and compliance.
In 2021, the project will be renamed mBridge (Multi-CBDC Cross-Border Payment) and will be jointly participated by the Innovation Center of the Bank for International Settlements, the Digital Currency Research Institute of the People's Bank of China and the Central Bank of the United Arab Emirates. The aim of the project is to continue the development of a proof-of-concept prototype to facilitate real-time cross-border foreign exchange transactions. More than 20 private sector actors, including financial institutions, banking associations and an exchange, from the four participating central bank jurisdictions contributed to the testing.
Singapore
Title: Dunbar, "Liquidity Management in Multi-Currency Cross-Border Payment Networks"
Index: 76
Region: Asia (3rd in Asia)
Important information:
To date, the Monetary Authority of Singapore (MAS) has explored and participated in more than five wholesale CBDC projects. In 2021, it expanded with two new projects, Dunbar and "Liquidity Management in a Multi-Currency Cross-Border Payment Network".
- During Project Dunbar, MAS collaborated with the Reserve Bank of Australia, Bank Negara Malaysia, South African Reserve Bank and BIS Innovation Center to design and develop a platform to facilitate settlement of multiple CBDCs. The project developed prototypes showing how commercial banks could transact directly with each other, using their respective countries' wholesale CBDCs, eliminating the need for intermediaries and reducing the time and cost of cross-border transactions.
- During the project "Liquidity Management in Multi-Currency Cross-Border Payment Networks", MAS and Banque de France collaborated to explore the possibility of facilitating cross-border, cross-currency CBDC transactions. The CBDC prototype includes an automated liquidity pool and market-making service for the EUR/SGD currency pair. It utilizes smart contracts to manage the EUR/SGD exchange rate and ensure it stays in line with real-time market transactions.
Canada
Name: Jasper-Ubin
Index: 72
Region: Americas (No. 1 in the Americas)
Important information:
While the Bank of Canada has no current plans to launch a CBDC, it has engaged in active research and international collaboration to prepare for the future of money and electronic payments. This includes a case for a potential wholesale and retail CBDC, should implementation be required.
France
Name: Several (9 items)
Index: 72
Region: Europe (No. 1 in Europe)
Important information:
In November 2021, the Bank of France announced the completion of the experiment launched in the spring of 2020, with the goal of testing the use cases of wholesale CBDC in multiple fields, testing different technical solutions, and the impact of issuing CBDC on macroeconomics and monetary policy.
Nine different experiments tested the risks/benefits and technical implementation of wholesale CBDCs. The tests covered various uses of CBDC, from the subscription/redemption of monetary funds to cross-border settlement. A real bond issuance worth EUR 100 million was addressed through a wholesale CBDC designed for the experiment. According to the bank, the experimental results show that a CBDC based on blockchain and distributed ledger technology can effectively accelerate the settlement of secure transactions between different currencies while ensuring the security of transactions. The bank is said to maintain control over currency issuance and circulation by using smart contracts, while also experimenting with interoperability with current wholesale settlement systems.
Name: Dunbar
Index: 64
Region: Africa (No. 1 in Africa)
Important information:
In 2021, the South African Reserve Bank announced that it will participate in the Dunbar project together with the Monetary Authority of Singapore, the Reserve Bank of Australia, the Bank of Malaysia, and the Innovation Center of the Bank for International Settlements. CBDCs trade with each other, eliminating the need for intermediaries and reducing the time and cost of cross-border transactions.
Name: mBridge, Aber
Index: 63
Region: Middle East (No. 1 in the Middle East)
Important information:
The Central Bank of the UAE continues to explore and test the possibility of issuing a wholesale CBDC through two international projects.
‒ mBridge: In February 2021, the Central Bank of the United Arab Emirates joined the multi-CBDC cross-border payment project (mBridge) mentioned above.
Japan
Name: several
Index: 55
Region: Asia (4th in Asia)
Important information:
In April 2021, the Bank of Japan launched a 12-month retail CBDC exploration with the support of the industry committee. In the first phase, the Bank of Japan developed a test environment for CBDC and conducted experiments on core functions such as issuance, distribution, and redemption. The bank plans to launch a second phase in April 2022 to test other functions of the CBDC. However, Japan currently has no plans to actually issue a CBDC, it is just exploring.
In addition, the Bank of Japan is participating in globally coordinated wholesale CBDC research and development with other institutions.
Name: Aber
Index: 54
Region: Middle East (Second in the Middle East)
Important information:
The Saudi central bank is exploring wholesale CBDC opportunities and its use cases, while also considering solutions beyond CBDC, including smart contracts and cryptocurrencies. The country's goal is to increase the electronic payment rate to 70% by 2030 (57% in 2021), and CBDC will be one of the important measures to achieve this goal.
In 2019, the Central Bank of Saudi Arabia and the Central Bank of the United Arab Emirates jointly launched a CBDC project, Aber, to explore the feasibility of developing a digital currency jointly issued by the two central banks. With the joint participation of a number of commercial banks from both countries, the project has proven that dual digital currencies can effectively settle local or cross-border payments.
Name: Helvetia
Index: 54
Region: Europe (Second in Europe)
Important information:
In January 2022, the Swiss National Bank, the BIS Innovation Center and a financial infrastructure operator completed the second phase of the Helvetia project, which, according to participants, showed:
‒ Wholesale CBDC could be integrated into existing core systems and processes used by central banks and other commercial banks.
‒ It is feasible to issue a wholesale CBDC on a distributed ledger technology platform operated and owned by a private company.
‒ The transition to a tokenized financial ecosystem raises wider issues such as increased complexity of settlement, complexity of liquidity management, complexity of integration of trading and settlement.
first level title
U.K.
U.K.
World ranking: No. 24
Index: 43
Region: Europe (6th in Europe)
Important information:
In June 2021, the UK Treasury and the Central Bank launched a retail CBDC working group to explore a possible UK CBDC. In addition, the two departments have also established a CBDC technical forum to collect strategic opinions from different technical personnel.
However, in January this year, the House of Lords Economic Affairs Committee called a UK retail CBDC "a solution to a problem" and said they had yet to hear a convincing case as to why the UK needed a retail CBDC.
Treasury and the central bank will launch a new public consultation in 2022 to assess the case for a retail CBDC in the UK. The House of Lords has also encouraged them to consult on a potential wholesale CBDC.
In March 2022, the Bank of England and the Massachusetts Institute of Technology announced a 12-month joint research project to explore the potential technical challenges, trade-offs, and risks involved in building a CBDC system.
USA
USA
World ranking: No. 31
Index: 40
Region: Americas (7th in the Americas)
Important information:
In March 2022, the U.S. government issued an executive order on digital assets and blockchain technology. The order identified developing a U.S. CBDC as a matter of “highest urgency.” In addition, several benefits of CBDC are highlighted in the order, including expanding the accessibility of financial services, reducing the cost of transferring funds, and strengthening the leadership of the United States in the global financial system.
Prior to this order, the Federal Reserve released a document inviting public comment on the opportunities, risks, and policies of developing a CBDC. The document shows that the Fed will seek to ensure that a CBDC balances privacy with protection against illicit activity, is intermediated by financial institutions, and has identity verification requirements.
Also in February 2022, the Boston Fed and its university partners released preliminary results from a joint CBDC study demonstrating their ability to create a system that can process 1.7 million transactions per second.
European Union
European Union
World ranking: No. 36
Index: 36
Region: Europe (eighth in Europe)
Important information:
In October 2021, the European Central Bank began a two-year investigation into the euro CBDC and established a market advisory group consisting of 30 professionals from the payment industry. In March, the ECB released the results of its research, noting that participants had little knowledge of CBDC, but generally believed that banks were the safest and most reliable providers of CBDC.
At the same time, the European Commission announced in February 2022 that it plans to propose a bill for a euro CBDC in early 2023. The bill will have to be discussed in EU parliaments before it becomes law.
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
risk warning:
According to the "Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions" issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
