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World’s top central banks have started pilot testing CBDCs and we can expect a full-fledged rollout from several of these in the next 4-5 years.
Central bank digital currencies (CBDCs) remain the hot top of discussion as of now. The unprecedented participation in the crypto space has forced central banks to think in this direction. As a result, top economies worldwide are putting major resources in CBDC experiment tests while exploring other use cases.
A new tracker from the Atlantic Council gives interesting insights into these developments. This Council is a nonpartisan organization with its CBDC tracker monitoring 83 countries worldwide. The data shows that nearly 81 countries are understanding the opportunities and challenges with CBDC. Of these, five nations also implemented the digital version of their national currencies.
These five CBDCs currently in use are all from the Caribbean region. Countries like the Bahamas, Antigua and Barbuda, Saint Kitts and Nevis, Saint Lucia and Grenada have turned to digital cash systems.
Furthermore, the tracker shows that CBDC developments are currently in the pilot stage in some of the top economies. The tracker also shows that CBDCs are currently in the pilot stage in 14 other countries. This includes countries with the world’s four largest central banks – the European Central Bank, Bank of England, Bank of Japan, and the US Federal Reserve.
The US is currently the most lagging in terms of CBDC development. However, the Federal Reserve will release its official CBDC discussion paper ahead in the next two months. Fed Chairman Jerome Powell recently stated that the development of the Digital Dollar is a high priority.
He also said made a somewhat controversial statement recently. Jerome Powell added that once the Digital Dollar is out in the market, it will reduce the importance of public cryptocurrencies and stablecoins, and that the world won’t need them anymore.
China Leads the CBDC Experiment Pack
Among the top global economies of the world, China has accelerated its CBDC development over the last two years. Besides, it has introduced strong regulatory measures to curb the use of public cryptocurrencies like Bitcoin.
The Chinese central bank is making an aggressive push for the use of the Digital Yuan. PBoC has already pilot-tested the CBDC in several cities of the country. On the other hand, the central bank is willing to introduce its Digital Yuan for use at the 2022 Winter Olympics in Beijing.
However, four US Senators from the Republican party have raised concerns saying that it could pose risks to privacy and financial security. Responding to this, Beijing has asked the US to “stop making trouble”.
Analysts believe that the Digital Yuan will play a crucial role in challenging the US dominance in the international trade market. Besides, some believe that it can challenge the USD’s status as the world’s reserve currency. We are not sure about where the battle of the two biggest economies will lead to. However, it will surely provide a boost to the use of CBDCs while adopting digital currency technology.