Digital currencies are being used by central banks all around the world, but some are more advanced than others. The health of each central bank’s digital currency initiative is depicted on this map using data from the Atlantic Council’s Currency Tracker. To understand Central bank digital currency here is some basics.
Digital Currency: The Basics
Although digital currencies have existed since the 1980s, they didn’t achieve widespread acceptance until the 2009 debut of Bitcoin. Thousands of digital currencies, often known as “cryptocurrencies,” are in use today.
The fact that cryptocurrencies are built on a blockchain record is one of their distinguishing qualities. Although blockchains can be either centralized or decentralized, the most well-known cryptocurrencies of today (such as Bitcoin, Ethereum, and others) are often decentralized. As a result, it is particularly challenging to track down transactions and payments as no one entity has complete control.
On the other hand, a central bank will have authority over and be able to readily trace government-issued digital currencies. They would be issued digitally and have no physical form, but they would have the same value as the local hard currency.
Digital currencies used by central banks Worldwide
Presently, 105 nations are investigating centralized digital currencies. They account for 95% of the global GDP collectively. The infographic’s data are listed in the table below.
When taken as a whole, we can observe that the majority of nations are still conducting research.
The map has also been divided into regions to make viewing simpler.
Central bank digital currency status Africa :
Central bank digital currency status Asia
Central bank digital currency status Europe
Central bank digital currency status Middle East
Central bank digital currencies status South America:
Central bank digital currencies status North America:
Benefits of CBDC :
Government-issued digital currencies have the potential to increase access for those who lack bank accounts.
In industrialized nations like the U.S., this is not a major problem, but many individuals in poor countries lack access to banks and other financial institutions (hence the term underbanked). Digital currencies are a sensible answer as the number of internet users rises.
Visit this article from Global Finance, which covers the nations with the lowest levels of banking in 2021, for more information on this subject.
Only 9% of nations have so far introduced a digital currency.
This includes Nigeria, which did so in October 2021 to become the first African nation. 200 million people, or 50 percent of the population, are thought to not have access to bank accounts.
The eNaira’s (the naira’s digital equivalent) adoption has been quite slow thus far. As of April 2022, the eNaira app had received 700,000 downloads. Though not all downloads are from Nigerian users, that equates to 0.35 percent of the population.
Contrarily, despite efforts by the Central Bank of Nigeria to impose restrictions on usage, 33.4 million Nigerians were believed to be trading or possessing crypto assets.
Status of CBDC in the United States.
The Federal Reserve, the country’s central bank, has not determined whether to launch a central bank digital currency (CBDC).
Our main concern is whether and how a CBDC could enhance an already secure and effective domestic payment system in the United States.
See the Federal Reserve’s January 2022 paper on the benefits and drawbacks of CBDCs for further information.