In an ever-increasing digital world, countries are now taking the step to digitise their monetary ecosystem with the creation of a Central Bank Digital Currency (CBDC).
Across the world, only two nations currently use a CBDC, with the Bahamas’ ‘Sand Dollar’ launching in 2020 and Nigeria’s ‘e-Naira’ in October of this year.
Despite just two countries having a CBDC in place, many others had either begun research on one or are in the final stages of rolling it out ready for the year ahead
China seems to be ahead of the pack with plans to release its ‘e-CNY’ digital currency by February.
The People’s Bank of China (PBOC) announced the news in September, and pilot testing of the digital currency had already taken place in cities such as Shenzhen, Shanghai, Hainan, Changsha and, Dalian.
The e-CNY can be used to purchase goods online and offline, as well as pay electricity bills, tolls, and transport fares, according to the PBOC.
China’s history with cryptocurrency is well documented and pilot testing of the CBDC showed how widely used it was by Chinese citizens with the e-CNY used to conduct 62 billion yuan ($9.7 billion) of transactions by the end of October 2021.
One of the leading nations in Bitcoin mining, Kazakhstan has completed a prototype of a digital tenge platform and will decide whether to fully launch its CBDC by the end of 2022.
A pilot CBDC project is in preparation, according to Erbolat Dossayev, governor of the National Bank of Kazakhstan, with local financial companies and some international partners to be involved in the pilot testing.
The central Asian nation had attempted the centralisation of cryptocurrency earlier this year and its potential CBDC will give the government more control in the regulation of financial transactions.
Similar to Kazakhstan, a pilot testing of Russia’s digital ruble will launch in early 2022.
Bank of Russia Governor Elvira Nabiullina confirmed the news last month, and said the pilot program would decide whether the digital ruble will be launched or scrapped.
There has been criticism of the digital ruble with concerns over fraudsters and hackers being able to access the blockchain-based currency.
The Central Bank of Brazil (BCB) announced plans to start a pilot program of a digital currency this year with 2024 earmarked as the year the final version of a ‘digital real’ will be launched.
Brazil may be behind its competitors in being the first to launch its CBDC in the upcoming year, but they may be the most likely to officially launch it due to the nation’s acceptance of cryptocurrency and the digital economy.
According to the BCB, Brazilians have acquired $4.27 billion in cryptocurrencies so far in 2021.
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