Global Momentum Builds for Central Bank Digital Currencies, Study Finds

Central bank digital currencies (CBDCs) are gaining significant traction worldwide, with research from the Atlantic Council revealing that 134 countries, representing 98% of the global economy, are now exploring digital versions of their currencies. The study highlights a notable increase in CBDC development, with almost half of these countries at advanced stages of exploration, and early adopters like China, the Bahamas, and Nigeria witnessing a surge in usage.

The Atlantic Council’s report indicates that all G20 nations are now actively researching CBDCs, with 44 countries currently conducting pilot programs, a significant increase from 36 countries a year ago. This global push for CBDCs is driven by several factors, including declining cash usage, the rise of cryptocurrencies like Bitcoin, and concerns about the potential impact of “Big Tech” on monetary systems.

One of the most significant developments this year is the increased usage of CBDCs in countries that have already launched them, such as the Bahamas, Jamaica, and Nigeria, challenging the narrative of low adoption rates. China, which is leading the world’s largest CBDC pilot program with its digital yuan (e-CNY), has seen transaction volume nearly quadruple to 7 trillion yuan ($987 billion).

“We’re observing a real uptick in CBDC usage in countries that have already launched them,” said Josh Lipsky, director of the GeoEconomics Center at the Atlantic Council. “My prediction is that China’s central bank will be close to a full launch of the e-CNY within a year.”

The European Central Bank’s multi-year digital euro pilot program and the United States’ participation in a cross-border CBDC project with six other central banks signal further progress in CBDC development. While the U.S. has been slower to embrace CBDCs, concerns about privacy and the potential impact on the financial system have fueled a lively debate about their implications.

The study also highlights the rapid growth of “wholesale” CBDCs designed for interbank transactions. The mBridge project, a notable example, connects the CBDCs of China, Thailand, the UAE, Hong Kong, and Saudi Arabia, with plans to expand to more countries this year.

Key Takeaways:

• 134 countries, representing 98% of the global economy, are exploring CBDCs.
• Early adopters of CBDCs are witnessing a significant increase in usage.
• China’s digital yuan (e-CNY) is the world’s largest pilot program, with transaction volume nearing $1 trillion.
• The European Central Bank and the U.S. are making progress on their respective CBDC initiatives.
• Wholesale CBDC projects are gaining momentum, with mBridge connecting multiple central banks.

The increasing momentum behind CBDC development underscores the transformative potential of digital currencies for global financial systems. As central banks around the world continue to explore and experiment with CBDCs, their impact on monetary policy, financial stability, and cross-borde