Compared with developed economies, emerging economies are generally more motivated to develop general-purpose CBDC projects.
Original title: “New Crown accelerates the CBDC process, 20% of the world’s population is expected to hold CBDC within 3 years”
Written by: Mori Goro
Central banks in emerging markets believe that CBDC can help promote financial inclusion, improve financial stability, and increase payment efficiency and security. Central banks in developed countries believe that digital currencies are “very important” for improving payment security.
2020 is the first year of the well-deserved digital currency. In October 2020, the central banks of G7 countries and the Bank for International Settlements (BIS) issued a digital currency feasibility report “Central Bank Digital Currency: Basic Principles and Core Features”.
Last month, the Bank for International Settlements conducted a survey of central banks in 65 countries around the world. The report showed that 86% of central banks are exploring the advantages and disadvantages of CBDC, an increase of nearly 53 percentage points from 33% four years ago. Among the central banks of the countries participating in the survey, 20 countries are developed countries and 45 countries are developing countries, covering 75% of the global population, including:
Data source: Bank for International Settlements
As shown in the figure, 60% of the central banks surveyed have already launched their own CBDC projects, and more and more central banks are preparing. 20% of central banks stated that they can issue CBDC within 6 years. At the same time, the report concludes: 20% of the world’s population is expected to hold CBDC within 3 years.
However, most central banks are still unlikely to issue CBDC in the foreseeable future, about 70%. Some central banks with advanced CBDC projects have become more and more cautious in assessing their issuance time limits. At the same time, people are increasingly aware of the cross-border impact of CBDC on the financial system, prompting international cooperation among central banks to find common ground in policies.
The report stated: “Compared with advanced economies, emerging economies are generally more motivated to develop general-purpose CBDC projects.” Data from central banks in emerging markets show that CBDC can help promote financial inclusion, improve financial stability, and increase payment efficiency and safety. At the same time, it is clear that central banks in developed countries believe that digital currencies are “very important” for improving payment security.
The new crown accelerates the CBDC process, and the acceptance of national financial subsidies becomes higher
The report shows that Covid-19 has accelerated payment digitization and added new momentum to CBDC. Central banks try to find a balance between urgency and caution.
About 60% of central banks said that the new crown crisis has not changed their country’s priority or preference for issuing CBDC. For those central banks that have changed their stance on CBDC due to the new crown crisis, the main reason is related to the problem of central bank funds reserves. The social distance of the new crown has undoubtedly greatly promoted the development of online payment and electronic money. During the new crown period, the use of CBDC as a payment method has also been widely recognized in the financial assistance of national subsidies and revitalization policies.
Although the central banks of most countries said that the cash in circulation in their countries has not decreased, the cash used for payment has decreased significantly, which has become one of the motivations for countries to support the issuance of CBDC. Under the new crown epidemic, the changes in people’s consumption patterns have not only directly disrupted companies, but also constantly changed their perceptions of money.
Bahamas officially certified the first CBDC project
The only project currently recognized by the Bank for International Settlements is the Bahamas CBDC project. Linked also mentioned in the previous article that the Central Bank of the Bahamas has started issuing the digital currency Sand Dollar on October 20.
Other emerging economies
On October 28th, Chia Serey, Director of the Central Bank of Cambodia, announced that Bakong planned to complete the trial operation and has issued the digital currency “Bakong Coin”. As early as November 2016, the Monetary Authority of Singapore (MAS) introduced the Ubin project and cooperated with R3 to establish a proof-of-concept project to use blockchain technology for inter-bank payments. For details, please refer to the exclusive news of Linkdede: Looking back at the first year of CBDC: China has already drawn, Europe, America and Japan are vying to chase.
Chinese “Renmin Yuan”
Everyone is familiar with the digital currency “Renmin Yuan” of the People’s Bank of China. In terms of operation and pilot projects, China has already taken the lead. However, the closed domestic pilots are like enemies in Europe, America and Japan. For details, please refer to the previous report of Linkde: G7 held an emergency meeting last night in an attempt to restrain the issuance of digital renminbi.
India rejects digital currency and expects to issue central bank digital currency
Recently, India discussed the “Digital Currency Regulatory Act” submitted in the previous few days in Congress. The bill basically prohibits the investment and use of all digital currencies.
At the end of January, the Indian House of Representatives homepage released the discussion agenda of the bill, including the “Digital Currency and Official Digital Currency Regulatory Bill.” The outline of the bill states: “A framework will be established to promote the issuance of official digital currencies by the Reserve Bank of India (Central Bank)”, and “digital currencies issued by all companies will be prohibited.” Investment-related digital currencies exist.
At present, this bill has not yet reached a final conclusion, but it is certain that the form of existence of digital currency in India has been restricted to the scope of central bank digital currency. On February 11, local media in India reported that investors who illegally hold digital currencies need to turn in or dispose of their digital assets within 3-6 months after the passage of the bill.
Investors are very wary. At present, many giant investors in India have jointly called for orders on Twitter, but in terms of actual results, they have little influence. Regarding Musk’s crazy entry into the game at the beginning of the month, in India, the relevant person in charge of the Reserve Bank of India said:
“We are skeptical of digital currencies and cryptocurrencies issued by companies, and the risks involved are too high.”
Although speculative trading and investment in digital currencies are prohibited, one trend is that India is preparing to issue central bank digital currencies.
Japan’s “Nebula Project” only owes east wind
The Japanese market has a very early enlightenment on the trading and use of digital currency, and it was once the center of digital currency exchanges. Although its status has plummeted after the Coincheck incident in 2017, the Bank of Japan has invested heavily in the “Project Stella”. Big.
In 2018, a reporter from Linkdee stationed in Japan directly interviewed the director of the Bank of Japan’s “Project Stella” (Project Stella), the director of the Bank of Japan’s FinTech Center, Toyo Shima. He said that after several visits to Shanghai and other places, Japan Banks are also actively promoting the development of CBDC projects. As of February this year, the Bank of Japan CBDC, which has entered the second phase, has been delayed due to the new crown, but the development of technical support (European Union), market (domestic popularity) and acceptance (national use and investment enthusiasm) It is relatively complete, and the speed of launch and popularization is likely to exceed that in China.
European developed countries lag behind
In developed countries in Europe, there is no central bank that takes the lead, and the European Union has not yet launched its own central bank digital currency. However, the European Union has conducted a systematic and comprehensive study on the theory, influence, and technical implementation of central bank digital currency. In October 2020, the European Union released the “Digital Euro Report”, which systematically explained the digital euro.
However, there are occasional news about private CBDC projects, such as Sweden’s ongoing “e-crona” trial. Electronic payments are already common in the country, and the cash usage rate is as low as about 2%. The Swedish project is mainly led by private private enterprises, but from the perspective of information processing and the effectiveness of Swedish monetary policy, it also plays an important role in the CBDC project.
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