A comprehensive study released on Thursday, March 14th 2024, by the US-based Atlantic Council think tank reveals that 134 countries, representing 98% of the global economy, are actively exploring digital versions of their currencies.
More than half of these nations have progressed to advanced development, pilot, or launch stages, signalling a widespread embrace of digital currencies globally.
While most G20 countries are advancing their digital currency initiatives, the United States stands out as falling behind. The report highlights that all G20 nations, except Argentina, are in advanced phases of CBDC exploration.
However, while progressing slowly with a “wholesale” digital dollar for banks, the US appears to have stalled in its efforts to develop a digital currency accessible to the wider population.
The Federal Reserve Chairman’s Statement:
Federal Reserve Chairman Jerome Powell’s recent statement that nothing resembling a retail digital dollar is close to implementation underscores the challenges facing the US in this arena.
Despite President Joe Biden’s directive to explore a digital dollar in 2022, the issue has become politically divisive, with Biden’s opponent in the upcoming election, Donald Trump, staunchly opposing its implementation.
Josh Lipsky of the Atlantic Council points to the growing divergence between major central banks, particularly noting China, Europe, and Japan’s advancements in CBDC development.
China’s digital yuan, in particular, stands as the most significant and advanced pilot, having undergone extensive trials across various scenarios, including public transport ticketing and COVID-related transactions.
The Rapid Global Adoption of CBDCs:
While proponents argue that digital currencies offer new functionalities and an alternative to physical cash, concerns over government surveillance have sparked protests in several countries.
However, the rapid global adoption of CBDCs could potentially lead to a fragmented international payments system, with Washington risking a decline in global financial influence if it fails to keep pace with evolving standards.
The report also highlights a surge in cross-border wholesale CBDC projects, with thirteen such initiatives currently underway.
These projects, including the “mBridge” connecting China, Thailand, the UAE, and Hong Kong, signify a growing trend towards alternative payment systems outside the traditional dollar-dominated framework.
Major economies such as those in the BRICS bloc, along with the European Central Bank, are poised to lead the way in CBDC launches by 2027, potentially reshaping the global financial landscape.
