Snek (snek) 
Central Bank Digital Currencies: A Growing Trend Globally
Over the years, policymakers in the United States have been studying, debating, and issuing reports on whether the Federal Reserve Bank should create a central bank digital currency, or “digital dollar.” However, despite these efforts, no definitive course of action has been taken.
CBDCs are digital versions of traditional paper fiat currencies backed by governments and issued to promote economic inclusion and broader access to financial services. They improve monetary policy in global payment systems and mitigate the risk of financial instability arising from unregulated private electronic payment instruments.
Types of CBDCs
There are two types of CBDCs: retail CBDCs, used by the general public, and wholesale CBDCs, exclusively designed for interbank payments and securities transactions.
US CBDC Ban
On January 16, President Donald Trump’s Treasury nominee, Scott Bessent, testified before the Senate Finance Committee strongly opposing the introduction of a CBDC in the US, citing privacy and economic concerns. Following this announcement, on January 23, President Trump signed an executive order officially prohibiting the establishment, issuance, circulation, and use of CBDC in the US.
“In my opinion, CBDC would end up hurting the US since it would reduce USD utility by increasing censorability and reducing privacy. Embracing stablecoins is the better path.” – Rhett Shipp, CEO of Avant
Global CBDC Adoption
The global adoption rate of CBDCs is being monitored by the Atlantic Council’s tracker, which follows CBDC developments in 134 countries. So far, 66 countries are exploring CBDCs, with China leading the way. Only three countries, including Nigeria, Jamaica, and Bahamas, have issued CBDCs.
China’s e-CNY: The World’s Most Used CBDC
China has been taking the lead in developing domestic and cross-border tokenized payment networks via digital currencies. The e-CNY program was piloted in 2019 with 260 million wallet users in 17 provincial-level regions, making it the most utilized CBDC pilot in the world.
As of June 2024, China’s digital yuan has carried out transactions totaling 7 trillion yuan ($982 billion), nearly four times the 1.8 trillion yuan recorded by the end of June 2023. The success of the e-CNY is attributable to the Chinese Government’s efforts to expand the scope of retail and wholesale CBDC transactions for increased adoption.
EU’s Wholesale CBDC Initiative
The European Central Bank has been exploring CBDCs since 2020, including a consumer-facing retail digital euro and wholesale cross-border settlement between central banks. In response to the US’s CBDC ban, the ECB announced that it is expanding the development of its wholesale CBDC payment system to settle transactions between institutions.
Global CBDC Development
Except for the US, 19 out of G20 nations are developing advanced-stage CBDC programs. As William Quigley, a cryptocurrency and blockchain investor, explains, “Each country will adopt the tokenization of the financial sector and implement a CBDC at the retail and/or wholesale level at its own pace.”
As the world continues to adopt CBDCs, it’s essential to stay informed about the latest developments in the cryptocurrency and blockchain space. For more news and updates, visit Global Crypto News.
