What is CBDC?
Central bank digital currency (CBDC) is a digital form of fiat money issued by a central bank, rather than a commercial bank. It is denominated in the sovereign currency and is also a liability of the central bank. Similar to other types of money, a CBDC would allow the general public to make digital payments.
More central banks are actively investigating the possibility of introducing CBDCs, and 114 countries, representing roughly 95% of global GDP, have developed or tested in the pilot stage of their CBDCs projects in 2022 (Source: Atlantic Council).
Some common motivations for issuing CBDCs include promoting financial inclusion, improving domestic payments system, creating programmable money for better transparency in money flows, and facilitating monetary and fiscal policies.
There is more to explore about CBDCs! Therefore, we’ve compiled top CBDCs projects worldwide you won’t want to miss in the article.
Top CBDCs Projects You Should Know
China: eCNY – Led by People’s Bank of China (PBOC)
Status: Pilot Launched
The digital yuan, also known as e-CNY, is a central bank issued digital currency that is similar to physical cash. Its main use is for retail payments in China. The currency is fully supported by PBOC and is deployed by payment service providers.
Objective:
- To provide a convenient, efficient and secure retail financial system to increase financial inclusion, preserve monetary sovereignty, and to provide a ‘backup’ payment infrastructure for the payment solutions.
- To reshape China’s current payment system to be more accessible to all, low cost, anonymous, and facilitates competition among payment service providers.
- To create a digital currency that can compete with other digital currencies such as bitcoins and other CBDCs, while ensuring that the renminbi continues to be the dominant currency in China.
Find more on this project on CFTE’s analysis of blockchain projects.
India: Digital Rupee – Led by Reserve Bank of India (RBI)
Status: Pilot Launched
The Digital Rupee, also known as eINR or E-Rupee, is a tokenized digital form of the Indian Rupee. The RBI plans to introduce this digital currency as a CBDC and will be using blockchain distributed-ledger technology (DLT).
The RBI announced the launch of the first retail digital Rupee pilot in December 2022.
Objective:
- To improve the efficiency and security of retail payments, reduce transaction costs, and promote financial inclusion by providing greater access to digital payment systems, and increasing the transparency of financial transactions.
- To potentially provide the RBI with a greater level of control over the money supply and allow for more effective implementation of monetary policy.
Find more on this project on CFTE’s analysis of blockchain projects.
Japan: Digital Yen – Led by The Bank of Japan (BoJ)
Status: Under Development (Pilot to be launched in April 2023)
The BoJ is exploring the development of its CBDC that would be digitised, legal tender, and issued as a central bank obligation. The BoJ has been stepping up its research and conducting tests due to the rise of cashless transactions during and after the pandemic. Digital yen offers the advantage of speed over credit cards and electronic transfers for immediate payment for vendors in Japan.
Objective:
- Japan’s objectives for a CBDC differ from most other countries because of the preference for using cash in retail payments in the country. Hence, creating an offline payment system for functionality is a key consideration in the development of a CBDC.
Find more on this project on CFTE’s analysis of blockchain projects.
Nigeria: e-Naira – Led by The Central Bank of Nigeria
Status: Launched
eNaira provides a distinct type of money valued in Naira and it offers advanced payment options in retail transactions compared to traditional cash payments. In October 2021, Nigeria became the first country in Africa to launch a digital currency. During the launch, the governor of the Central Bank of Nigeria stated that the bank had already minted 1.2 million USD eNaira. And the eNaira infrastructure has been integrated with 33 commercial banks in the region.
Objective:
- To help Nigeria reach its target of increasing financial inclusion for the unbanked people in the region.
- To facilitate the economy in the region. According to President Muhammed Buhari, it is projected that eNaira could add 29 billion dollars to its GDP over the next ten years.
Find more on this project on CFTE’s analysis of blockchain projects.
Bahamas: Sand Dollar – Led by the Central Bank of the Bahamas
Status: Launched
The Project Sand Dollar, an initiative to issue a digital form of the Bahamian dollar is a type of CBDC that is centralised, regulated, stable, private, and secure. It is a liability of the central bank, backed by foreign reserves, and functions as a unit of account and a means of exchange. Since its launch, the adoption rate of Sand Dollar is around 8%.
Objective:
- To enhance financial inclusion and reinforce security measures to prevent money laundering and other illegal economic activities in the region.
Find more on this project on CFTE’s analysis of blockchain projects.
Australia: e-AUD – Led by The Reserve Bank of Australia
Status: Pilot to be launched in Mid-2023
The eAUD pilot programme for the digital currency of the Australian central bank will use a private blockchain network called Quorum, which is built on Ethereum. The use of Quorum will enable the development of smart contracts and application program interfaces as part of the pilot programme.
Objective:
- To make cross-border payments faster and more efficiently.
- To safeguard public trust in money and promote safety, resilience and innovation in financial market infrastructures.
Find more on this project on CFTE’s analysis of blockchain projects.
Russia: Digital Ruble – Led by Bank of Russia
Status: Under development
A digital ruble can make payments faster, simpler and safer. The development of digital payments along with an equal access to a digital ruble for all economic agents will reduce the cost of payment services and remittances and promote competition among financial institutions.
Objective:
- To stimulate innovations both in retail payments and in other areas and support the development of the digital economy.
- To decrease Russia’s dependence on the US dollar.
Find more on this project on CFTE’s analysis of blockchain projects.
Sweden: e-Krona – Led by Sveriges Riksbank
Status: Pilot Launched
In 2017, the Riksbank launched the e-krona project to evaluate the necessity of introducing an e-krona. Sweden is one of the lowest cash-usage countries in the world, which has allowed the country to more easily develop the e-Krona. The Swedish Riksbank is running a digital currency pilot from February 2020 to February 2021.
Objective:
- To strengthen the resilience of the payments market and increase financial stability.
Find more on this project on CFTE’s analysis of blockchain projects.
Singapore: Project Ubin – Led by MAS
Status: Pilot Launched
Project Ubin is a collaborative project with the industry to explore the use of Blockchain and Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities. Project Ubin is a multi-year multi-phase project, with each phase aiming at solving the pressing challenges faced by the financial industry and the blockchain ecosystem. The project is now in its fifth phase.
Objective:
- To improve speed, cost, and transparency of cross-border payments.
- To evaluate the implications of having a tokenized form of the SGD on a Distributed Ledger, and its potential benefits to Singapore’s financial ecosystem.
Find more on this project on CFTE’s analysis of blockchain projects.
Jamaica: JAM-DEX – Led by Bank of Jamaica (BOJ)
Status: Launched
JAM-DEX, the digital rendition of the national currency, is recognised as an accepted medium of exchange, issued by BOJ in an equivalent amount to physical cash. JAM-DEX is maintained in a digital wallet, accessible through a mobile application, which facilitates the seamless transmission, reception and utilisation of funds for its users.
Objective:
- To enhance financial inclusion and improve management processes and costs
- To facilitate the commitment to Jamaica’s transition to a digital economy
Find more on this project on CFTE’s analysis of blockchain projects.
Future outlook of CBDCs development
CBDCs hold the capability to be the forthcoming major transformation that will propel the banking and payment sector on a global scale, provided they are properly implemented. The ability of CBDCs to augment economies, minimise transaction duration and expenses, support financial inclusivity, and simplify cross-border transactions has piqued the interest of central banks and governments globally.
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