Cointelegraph predicts: the top 5 CBDCs that may be launched from 2021 to 2022


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The Central Bank Digital Currency (CBDC) has always been an important part of the ongoing discussions in the cryptocurrency community. CBDC is a virtual form of national legal tender. They are usually based on blockchain technology and are issued and regulated by the country’s official monetary organization. CBDC is different from cryptocurrencies such as Bitcoin and Ethereum in that they are backed by the central bank’s national currency deposits and are regulated by the central bank, which is not the case with cryptocurrencies.

Cointelegraph discussed the possible role of CBDC in the world economy with Thomas Trepanier, Business Development Director of Roxe (a blockchain-based payment and settlement platform launched by Apifiny). He said:

“CBDC enables central banks to provide more financial inclusion, especially for markets that are difficult to compete globally. CBDC can also eliminate inefficient processes and improve domestic and global transparency, especially considering the importance of KYC compliance Sex.”

The first officially issued CBDC was the Bahamian Sand Dollar issued by the Central Bank of Bahamas on October 21. The Saudi dollar is a state-backed currency, which is linked to the Bahamian dollar, which is in turn linked to the U.S. dollar. According to the official website, Bahamian citizens can use Saudi dollars to pay merchants who have electronic wallets approved by the central bank on their mobile devices, and transaction fees are negligible. Compared with wholesale CBDCs tailored for financial institutions, this feature makes the Saudi dollar a retail CBDC. The Central Bank of the Bahamas selected NZIA as a technical solution provider for managing the operation of digital currencies.

Cointelegraph discussed with the representative of the Central Bank of Bahamas, who explained how the retail CBDC achieved its goals:

“The core goal of the Saudi dollar project is to provide more inclusiveness for communities and socioeconomic groups in the Bahamas that do not have bank accounts and do not have adequate banking services, so that they can access regulated payment services and other financial services. A retail CBDC, SGD allows us to achieve this goal.”

Although the Saudi dollar was launched more than two months ago, its monetary function in the financial system is still unclear. According to an official press release, the first phase of Shayuan focuses on the private sector, while the second phase will begin in 2021, focusing on government services and public utilities.

Although Saudi Arabia is the first CBDC officially launched, many countries are running CBDC pilot projects or are actively discussing the introduction of CBDC. Cointelegraph has identified the first batch of 5 CBDCs that may be introduced in 2021 and 2022. These currencies include China’s digital renminbi, digital euro, Sweden’s electronic krona, Thailand’s digital baht, and Australia’s digital Australian dollar.

Digital RMB: the pioneer of CBDC

China’s digital renminbi is likely to become the next CBDC online. Considering its scale, the launch of the digital renminbi will be a milestone in the development of CBDC. The People’s Bank of China has been actively carrying out research on digital currency. It started as early as 2014. At present, digital RMB has launched pilot projects worth 300 billion U.S. dollars in more than 4 cities including Shenzhen, Suzhou, Chengdu and Xiong’an. China’s future CBDC is named Digital Currency Electronic Payment (DC/EP) and is supported by the RMB deposits of the central bank.

China is expected to become one of the first major economies to issue sovereign currencies. Regulators stated that the adoption of digital renminbi will help China’s digital renminbi to internationalize and break the US dollar’s ​​monopoly in international payments. Cointelegraph discussed this issue further with Adrian Huntelar, Customer Success Manager of Coinsquare, a digital asset platform. He said:

“The digital renminbi is the world’s largest trial-phase digital currency. Among the global economic superpowers, China has the first-mover advantage because the digital renminbi will be successfully piloted in 4 cities in 2020. Will the success of the digital renminbi enhance China’s international financial sector? This is still an issue to be considered.”

The Central Bank of China is also cooperating with the Hong Kong Monetary Authority (HKMA). Both institutions are in the preliminary stages of using electronic renminbi for cross-border payments. HKMA and the Bank of Thailand launched a joint research project in 2019 to solve the problems of cross-border payment and digital currency, and the project has entered the second phase.

Considering China’s huge population and high participation of mobile Internet users, the digital renminbi may prove to be the best use case for retail and wholesale CBDCs, and the best performance of its feasibility. According to information released in early November, the digital renminbi pilot has tested more than 2 billion yuan (approximately US$300 million) in transactions in more than 4 million independent transactions. Although the digital renminbi seems to be the first major currency to be launched in digital form, there are concerns about user data privacy and usage, and the Chinese government does not seem to care about this issue at present.

Digital Euro: the first multinational CBDC project

The European Central Bank (ECB) has begun to explore the prospects of a digital euro. Christine LaGarde, chairman of the European Central Bank, said, “If necessary, we should be prepared to issue a digital euro,” but could not determine a specific time or a design that meets the conditions. Due to the nature of the European Union (EU) and its 27 member states, many international and European institutions need to reach a consensus to meet the expectations of all potential stakeholders. Reaching a consensus will be a major change in the way the European economy operates.

On October 2, 2020, the ECB released a report on the digital euro. The report highlighted the reasons for the issuance of the digital euro, its potential impact, and compliance issues that need to be taken into consideration. According to the report, by mid-2021, the ECB will decide whether to launch the digital euro project.

The “Digital Euro Report” stated that one of the goals of the digital euro is to set the rate of return on investment of the digital euro through the use of monetary policy, thereby directly affecting consumption and investment choices in the non-financial sector.

E-krona: Sweden’s CBDC

The e-krona is a CBDC being developed by the Swedish Central Bank (Sveriges Riksbank). Sweden cooperated with Accenture in 2019 to start a pilot test of the electronic crown. According to the plan, the e-krona will be launched as a retail CBDC, and its pilot project aims to show the public how to use this currency.

After conducting a pilot test of the electronic crown in 2019 and 2020, the Riksbank is currently exploring the feasibility of switching to digital currencies for the entire country. The Bank for International Settlements (BIS) calculated in 2018 that Sweden is the country with the least use of cash in the world. BIS reached this conclusion by calculating the percentage of Sweden’s gross domestic product (GDP). In fact, according to the Riksbank’s research, during the pandemic, Sweden’s cash utilization rate fell to the lowest level, less than 10%.

The low level of cash utilization rate shows that most citizens of Sweden are used to digital payment methods. Therefore, through some additional infrastructure, the transition to the electronic crown is more effective and convenient for the public. Swedish Minister of Financial Markets Per Bolund stated that the evaluation of the e-krona should be completed by November 2022.

Thailand: Digital Baht

The Central Bank of Thailand (BoT) has always been one of the leaders in the development of CBDC, and the Bank of Thailand’s own CBDC plan is called the “Inthanon Project”. Earlier in July this year, BoT passed the third phase of digital baht implementation in a test of several companies. Two years ago, BoT even tested the digital baht as a wholesale CBDC. Eight large banks participated in the proof of concept of the digital baht: HSBC, Standard Chartered Bank, Bangkok Bank, Thai Capital Bank, Ayutthaya Bank, Thai Chinese Farmers Bank, Thai Commercial Bank, Thanachart Bank. In the proof of concept of the digital baht, BoT and the eight banks held a design thinking seminar and conducted functional tests to determine the pain points and design solutions of the digital baht.

BoT’s technology partners at the time were enterprise blockchain companies R3 and Wipro. BoT announced in October 2020 that it has achieved the issuance of digital baht on the Ethereum blockchain through the cooperation with the Ethereum development company ConsenSys to carry out the proof of concept of the retail CBDC digital baht. But considering the high gas fees on the Ethereum network, this may pose some challenges for retail investors. ConsenSys revealed that the digital baht will be issued through the Ethereum standard ERC-20 smart contract. This gives BoT an opportunity to consider the Decentralized Finance (DeFi) use case of the digital baht.

BoT actively develops the digital baht method, making them one of the leaders in the development of CBDC.

Australia: Digital Australian Dollar

Australia has always been one of the leaders in global blockchain technology adoption. Although there is no indication that the Reserve Bank of Australia (RBA) plans to launch a retail CBDC, in November, RBA has launched a project in cooperation with Commonwealth Bank of Australia, National Australia Bank, Perpetual and ConsenSys, by using cloth ledger technology ( DLT) to explore the feasibility of wholesale CBDC.

The project is expected to be completed around the end of 2020, and the partners plan to release a report on the project and its main research results in the first half of 2021. Considering how Australia has adapted to blockchain technology, after this, financial institutions may fully launch digital Australian dollars in the next few years. Trepanier of Apifiny, a global digital asset network, supports this hypothesis, saying:

“Australia is likely to be the first to launch CBDC because the country has been at the forefront of blockchain for a long time. The most famous example is that the Australian Stock Exchange has introduced blockchain technology to process stock transactions, and the technology provider is Blockchain startup Digital Asset Holdings, a well-known banker Blythe Masters.”

CBDC will be a rapidly developing field

Many other countries are still discussing testing and launching their own digital currencies. The United States, the United Kingdom, Germany and other countries are also discussing the practical feasibility of their digital currencies. South Korea is also conducting pilot testing of its CBDC. Taking into account the efforts of various governments to study the influence of CBDC, the trend of currency digitalization will accelerate and drive the development of the entire encryption industry.

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