CBDC: What is CBDC? And Which Countries Will Use It?

Home >> Education >> CBDC – What is CBDC? Which countries will use digital currency?

Jai Pratap

Updated January 10, 2023
A CBDC is a digital currency that has been authorized and issued by a central bank. Nearly 114 countries are exploring the possibility of a national digital currency, the CBDC. According to the Bank of International Settlements CBDC is being viewed by many as a new type of central bank money. CBDCs are being adopted by central banks to compete with decentralized and private cryptocurrencies like Bitcoin and Ethereum. Fan Yifei was the deputy governor of China’s central bank at the time. He asked central banks to lead the development of a CBDC. Central banks launch digital currencies to stop competition from private digital currencies. Another reason central banks develop digital currencies is to be able to trade internationally without relying on the US dollar. List of countries that are developing CBDC: Nearly 114 countries, which represents 95% of the global GDP, are currently exploring CBDC in some capacity. Over 20 countries will make significant progress towards piloting a CBDC in 2023. Trending StoriesIndia: On 29 January 2021, India’s central government proposed a bill that would ban cryptocurrency trading and investment, while giving legal authority to the RBI to develop CBDC. India’s finance minister last year announced that the Digital Rupee would be available by 2023. India has already started a pilot of its wholesale and retail CBDC. According to a whitepaper published in September 2022, the Reserve Bank of Australia (RBA) expects to complete its central bank digital currency pilot by mid-2023. In August last year, the central bank launched the pilot of its CBDC. According to a white paper published in September 2022, Australia’s Reserve Bank of Australia (RBA) stated that they expect to complete their central bank digital currency pilot by mid-2023. South Korea – A program that allows cross-border transfer of money by linking different central banks digital currencies (CBDCs) from other countries was tested by Bank of Korea. South Korea has completed the first two phases of the pilot program by January, and will likely launch a larger launch later in 2018. Russia – Russia is attempting to create a cross-border settlement system by using a central bank’s digital currency (CBDC). Russia was subject to severe sanctions by the USA and other countries following its invasion of Ukraine. Russia has been able to accelerate its process to launch its CBDC. The European Central Bank will also launch its pilot CBDC this year. Earlier, Fabio Panetta, chief of the ECB, wrote in a blog, that CBDCs would help central banks to “save the trust upon which private forms of money ultimately rely.” United States – Federal Reserve Chair Jerome Powell announced plans for a detailed paper about central bank digital currency. This will highlight the possibility of issuing a US CBDC in May 2021. The Federal Reserve Bank of Boston published initial details of Project Hamilton in February 2018. This is a potential CBDC. The US may have fallen behind in the CBDC race but it is now on its way to launching its digital currency. Project Hamilton, a potential CBDC, was first announced by the Federal Reserve Bank of Boston. This is a surveillance tool that uses digital currency as a currency control tool. The central authority that controls the currency is the main difference between a CBDC or a decentralized digital currency. Many in the crypto industry were alarmed when China announced its plans for launching the digital yuan. China could use its digital currency to force CBDC adoption and monitor every transaction made by individuals. Every digital currency transaction leaves footprints that the government can access. Edward Snowden, a prominent whistleblower and advocate for digital privacy, thinks CBDCs may give governments too much control over citizens finances. Edward Snowden described CBDC in a comparison to a 1980s cartoon when he spoke at Camp Ethereal. “Scrooge McDuck from DuckTales had a huge vault full of dollars bills and coins. A giant magnet is attached to the vault’s top, which pulls dollars from the pockets of everyone in the town. This is what a CBDC looks like, right? That’s what a CBDC is, right? He warned that governments all around the world will replace physical cash with CBDC and usher into a new dystopia of financial surveillance.Conclusion:Majority of central banks around the world are engaging in CBDCs in some capacity. Although countries such as Russia, Iran, Venezuela and Iran are using it to bypass international sanctions and conduct international trades internationally, some are trying to force them down as a retail currency within their country. Several economists warned that the Chinese digital currency was a weapon to destabilize US Dollar as the world’s reserve money. It will be interesting to see how CBDCs will coexist with decentralized cryptocurrencies.About author
The content presented may contain the author’s personal opinion and is subject to market conditions. Before investing in cryptocurrency, do your market research. Recent blogs

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