{"id":448077,"date":"2022-05-16T16:01:00","date_gmt":"2022-05-16T13:01:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/"},"modified":"2022-05-16T16:01:00","modified_gmt":"2022-05-16T13:01:00","slug":"cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/","title":{"rendered":"# CBDC activity heats up, but few projects move beyond pilot stage"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a287002aea6f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a287002aea6f\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/#%E2%80%9D_CBDC_activity_heats_up_but_few_projects_move_beyond_pilot_stage_%E2%80%9C\" >&#8221; CBDC activity heats up, but few projects move beyond pilot stage   &#8220;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/#The_Bahamas_struggles_Sweden_deliberates_Chile_delays\" >The Bahamas struggles, Sweden deliberates, Chile delays<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/#What_is_driving_the_trend\" >What is driving the trend?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\/#Could_state-run_digital_currencies_co-opt_crypto\" >Could state-run digital currencies co-opt crypto?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9D_CBDC_activity_heats_up_but_few_projects_move_beyond_pilot_stage_%E2%80%9C\"><\/span>&#8221; CBDC activity heats up, but few projects move beyond pilot stage   &#8220;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div class=\"post-content\" data-v-2a0745c6>Government-issued electronic currency seems to be an idea whose time has come.\u00a0<\/p>\n<p>\u201cMore than half of the world\u2019s central banks are now developing digital currencies or running concrete experiments on them,\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bis.org\/publ\/bppdf\/bispap125.pdf\">reported<\/a> the Bank for International Settlements, or BIS, in early May \u2014 something that would have been unthinkable only a few years ago. <\/p>\n<p>The BIS also found that nine out of ten central banks were exploring central bank digital currencies, or CBDCs, in some form or other, according to its survey of 81 central banks conducted last autumn but just published. <\/p>\n<p>Many were taken aback by the progress. \u201cIt is truly remarkable that some 90% of central banks are doing work on CBDCs,\u201d Ross Buckley, KPMG-KWM professor of disruptive innovation at the University of New South Wales, Sydney, told Cointelegraph. \u201cThe year-on-year growth in this field is extraordinary.\u201d<\/p>\n<p>\u201cWhat I found most surprising was the speed at which advanced economies were moving toward retail CBDCs,\u201d Franklin Noll, president at Noll Historical Consulting, LLC, told Cointelegraph. \u201cAs recently as the middle of last year, central banks in advanced economies were taking a rather relaxed view of CBDCs, not seeing them as particularly necessary or worthy of much attention.\u201d<\/p>\n<p>Momentum accelerated last year, the report observed. After the Bahamas launched the world\u2019s first live retail CBDC \u2014 the Sand Dollar \u2014 in 2020, Nigeria followed in 2021 with its own electronic money, the eNaira. Meanwhile, the Eastern Caribbean and China <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bcentral.cl\/documents\/33528\/130503\/Primer_Informe_MDBC.pdf\/46608531-566b-0703-03ea-bcd0f088d014?t=1652282545260\">released<\/a> pilot versions of their digital currencies, DCash and e-CNY, respectively. \u201cAnd there is likely more to come: a record share of central banks in the survey \u2014 90% \u2014 is engaged in some form of CBDC work,\u201d said the BIS.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The_Bahamas_struggles_Sweden_deliberates_Chile_delays\"><\/span>The Bahamas struggles, Sweden deliberates, Chile delays<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Implementing a successful CBDC may be easier said than done, however. The Bahamas\u2019 new digital money has struggled to gain traction, accounting for less than 0.1% of currency in circulation in that island nation, the International Monetary Fund <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.imf.org\/en\/News\/Articles\/2022\/03\/21\/the-bahamas-staff-concluding-statement-of-the-2022-article-iv-mission\">said<\/a> in March, and \u201cthere are limited avenues to use the Sand Dollar.\u201d More education of the populace is needed, said the IMF, a challenge that other government-issued electronic currencies will probably face as well.\u00a0<\/p>\n<p>Sweden\u2019s central bank, the Riksbank, has been researching, discussing and experimenting with digital currencies longer than most. Its e-krona project began in 2017, and a pilot program, launched in 2020, is now in its second phase. Carl-Andreas Claussen, a senior advisor in the Riksbank\u2019s payments department, told Cointelegraph that there are lots of reasons why central banks might want to implement a CBDC, but \u201cat the Riksbank, it is first of all the decline in Sweden\u2019s use of cash.\u201d <\/p>\n<p>Sweden is racing toward becoming the Western world\u2019s first cashless society. From 2010 to 2020, the proportion of Swedes using cash fell from 39% to 9%, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/sweden.se\/life\/society\/a-cashless-society\">according<\/a> to the Riksbank. But, this also raises questions. As Claussen told Cointelegraph:<\/p>\n<blockquote><p>\u201cIf physical cash dis<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ears, the public will not have access to central bank money anymore. That will be a serious change from how it has been over the last 400 years in Sweden. With an e-krona, the Riksbank will offer central bank money that the public can use.\u201d<\/p><\/blockquote>\n<p>Still, nothing has been decided in Sweden. \u201cIt is not clear that we will need it,\u201d Claussen said. \u201cSo first, we have to sort out if we need it at all and if it is worthwhile to do it. We are not there yet.\u201d\u00a0<\/p>\n<p>Claussen has little doubt, however, that if a modern government decides to issue a digital currency it can succeed. It will need to be sure that it really needs a CBDC, however. \u201cNeither the Riksbank nor the larger central banks around the world have decided whether or not to issue a CBDC,\u201d he declared. Not even China? \u201cI have not heard that they have made a final decision to issue,\u201d he told Cointelegraph.<\/p>\n<figure><img decoding=\"async\" src=\"https:\/\/s3.cointelegraph.com\/uploads\/2022-05\/892c8164-4092-4468-8ef3-66cf22cbe00e.jpeg\"><figcaption style=\"text-align: center;\"><em>Riksbankshuset, the headquarters of the Swedish National Bank in Stockholm. Source: Arild V\u00e5gen<\/em><\/figcaption><\/figure>\n<p>Elsewhere, Chile announced last week that it was delaying the rollout of its CBDC, explaining that a government-issued digital peso required more study. Chile is looking to develop a national payment system that is \u201cinclusive, resilient, and protects people\u2019s information,\u201d <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.bcentral.cl\/documents\/33528\/130503\/Primer_Informe_MDBC.pdf\/46608531-566b-0703-03ea-bcd0f088d014?t=1652282545260\">according<\/a> to a report. But, its central bank said that it still doesn\u2019t have enough information to make a final decision on it.<\/p>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/cbdctracker.org\/\">According<\/a> to CBDC Tracker, only the Bahamas and Nigeria have progressed to full CBDC \u201claunch\u201d in the real world, while 2022 thus far has seen more canceled projects like Singapore\u2019s Project Orchid than full roll-outs. On the other hand, only five \u201cpilot\u201d programs were underway in January 2020, compared with 15 in May 2022, which suggests more launches could be imminent. <\/p>\n<p><strong><em>Related:\u00a0Blockchains are forever: DLT makes diamond industry more transparent<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_driving_the_trend\"><\/span>What is driving the trend?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The BIS sees different motivating factors behind this \u201cgrowing momentum\u201d toward CBDCs. Advanced economies tend to be interested in improving domestic payment efficiencies and safety, while maintaining financial stability. Poorer economies, emerging markets or developing economies, by comparison, may focus more on financial inclusivity, or look for ways to enable people who have never had a bank account to participate in the economy.<\/p>\n<p>Andrey Kocevski, co-founder at WhisperCash.com \u2014 whose firm has developed a digital bearer instrument that could be used by CBDCs \u2014 agreed that developing countries usually \u201cwant to compensate for the lack of private sector fintech or payment companies and to increase financial inclusion for the unbanked,\u201d further telling Cointelegraph: <\/p>\n<blockquote><p>\u201cI am not surprised that the number of central banks exploring digital currencies is at 90% now, considering last year it was 80% and in 2018 it was around 30%.\u201d<\/p><\/blockquote>\n<p>\u201cFor advanced economies, the catalyst was stablecoins,\u201d said Noll, adding that 2021 was \u201cthe year of the stablecoin.\u201d Central banks in the developed world began taking seriously the possibility that stablecoins could make headway against fiat currencies, threatening their monopoly on money and disrupting monetary policy potentially, he said.<\/p>\n<p>As for BIS\u2019 contention that the COVID-19 pandemic may have been a prod, \u201cI do not see much evidence for the impact of COVID-19 and a flight from cash driving new interest in CBDCs,\u201d added Noll. \u201cCash usage remains strong and may be rebounding to pre-pandemic levels.\u201d <\/p>\n<p>Peer pressure, too, could be a factor \u2014 yes, even among central bankers. As Buckley told Cointelegraph:<\/p>\n<blockquote><p>\u201cIf one\u2019s major competitor countries do this, everyone feels the need to follow or risk being left behind \u2014 some form of sophisticated FOMO.\u201d<\/p><\/blockquote>\n<p>Kocevski seemed to agree: \u201cCentral banks in developed countries feel the need to digitize in order to stay relevant.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Could_state-run_digital_currencies_co-opt_crypto\"><\/span>Could state-run digital currencies co-opt crypto?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Where do cryptocurrencies figure in all this? Just to be clear, government digital money is typically issued in the currency unit of the land such as pesos in Chile, and dollars in the United States, and is a \u201cliability\u201d of the central bank. Cryptocurrencies, by comparison, have their own currency \u201cunit\u201d \u2014 like Ether (ETH) \u2014 and are private digital assets with no claim on the central bank.\u00a0<\/p>\n<p>According to the BIS survey, most central banks see payment networks like Bitcoin and Ethereum posing little threat to their activities, and stablecoins even less: \u201cMost central banks in the survey still perceive the use of cryptocurrencies for payments to be trivial or limited to niche groups.\u201d<\/p>\n<p>Still, couldn\u2019t CBDCs pose an existential danger to cryptocurrencies at some point? \u201cA year ago I thought they would \u2014 now I don\u2019t,\u201d Buckley told Cointelegraph. CBDCs are essentially payment instruments, while cryptocurrencies are more like speculative assets. \u201cThese new instruments will not represent an existential threat to Bitcoin and the like, but they will make it harder for Bitcoin to argue for itself as anything other than a speculative play,\u201d he said. <\/p>\n<p>Gourav Roy, a senior analyst at the Boston Consulting Group in India, who also contributes to CBDC Tracker, told Cointelegraph that many governments still view crypto as a \u201cbig threat to their country\u2019s macroeconomics and main financial\/payment landscape,\u201d and for that reason, these countries regularly issue warnings about cryptocurrencies, introduce legislation to tax crypto transactions, and sometimes even ban crypto trading. Roy offered China as a case in point: It banned cryptocurrencies while at the same time \u201ccarrying out the world&#8217;s biggest CBDC pilot testing with 261 million users.\u201d <\/p>\n<p>That said, Roy still sees stablecoin projects surviving and continuing to play an important part in the decentralized finance ecosystem \u2014 even with widespread CBDC adoption. Kocevski, for his part, didn\u2019t think government-issued electronic money was an existential threat to crypto.<\/p>\n<p><strong><em>Related:\u00a0DeFi attacks are on the rise \u2014 Will the industry be able to stem the tide?<\/em><\/strong><\/p>\n<p>Noll not only believes that CBDCs and cryptocurrencies can co-exist, but CBDCs could potentially \u201cwork to popularize and mainstream crypto in <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>.\u201d As public and private sectors become more informed and comfortable with cryptocurrencies, \u201cthis should advance the entire industry,\u201d he told Cointelegraph, adding:<\/p>\n<blockquote><p>\u201cThe downside for crypto is that CBDCs will work to crowd out private cryptocurrencies, especially stablecoins focused on retail payment areas. Cryptocurrencies will stay in niches in the payment system where they serve unique functions and provide specialized services.\u201d\u00a0<\/p><\/blockquote>\n<p>Overall, much has happened on the CBDC front in recent years. While most advanced projects so far have been in non-Western economies like the Bahamas, Nigeria and China, interest in many Western economies like France and Canada seems to be picking up, all the more noteworthy because many already have advanced payment systems in place. As Noll said:\u00a0<\/p>\n<blockquote><p>\u201cJust look at President Biden\u2019s recent executive order, which is all about advancing a U.S. CBDC and is a far step from 2020 and 2021 speeches by Fed officials that questioned the need for any such thing.\u201d<\/p><\/blockquote>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/cbdc-activity-heats-up-but-few-projects-move-beyond-pilot-stage\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8221; CBDC activity heats up, but few projects move beyond pilot stage &#8220; Government-issued electronic currency seems to be an idea whose time has come.\u00a0 \u201cMore than half of the world\u2019s central banks are now developing digital currencies or running concrete experiments on them,\u201d reported the Bank for International Settlements, or BIS, in early May&#8230;<\/p>\n","protected":false},"author":1,"featured_media":448078,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjItMDUvODYzMjI1NzktZmE2Yi00MmE2LThjODQtYTBjZmI3ODU0NmNlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74894,75046,75022,74863,74889,75493,74892,74355,71511,55229,70934,4965],"class_list":["post-448077","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-blockchain","tag-cbdc","tag-central-bank","tag-cryptocurrencies","tag-payments","tag-stablecoin","tag-tokens","tag-adoption","tag-government","tag-law","tag-regulation","tag-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/448077","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=448077"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/448077\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/448078"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=448077"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=448077"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=448077"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}