It is estimated that more than 80% of central banks are considering launching a central bank digital currency (CBDC) or have already done so, according to the 2022 PwC CBDC Global Index, that analyzes and ranks the leading retail and wholesale CBDC projects.
Retail CBDC projects (digital currencies designed for public use) have reached greater maturity levels than wholesale projects (digital currencies used by financial institutions that have accounts with central banks), but the past year has seen progress on a number of successful wholesale pilots.
”There are at least 68 central banks that have communicated publicly about their CBDC work, with three live retail CBDCs and at least 28 pilot projects. In 2022 it is expected that CBDC research, testing and implementation will intensify, financial inclusion being one of the main desired outcomes. But, global authorities, including the International Monetary Fund, continue to provide reminders that countries adopting CBDCs must remain vigilant to various risks, including monetary policy implementation, bank funding, cyber security, operational resilience and financial integrity and stability”, said Gabriel Voicila, Technology Partner PwC Romania.
Retail projects in the Index are led by the Central Bank of Nigeria’s (CBN) eNaira, the first CBDC in Africa, and the Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020. China became the first major economy to pilot a CBDC in 2020 with the digital yuan, and as of March 2022 pilot programs are running in 12 cities, including Beijing and Shanghai.
On the wholesale side, the leading project in the Index is the combined effort of the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) to launch the mBridge project, focused on developing a proof-of-concept prototype to enable real-time, cross-border foreign exchange payments on distributed ledger technology. Also ranked highly is the work of the Monetary Authority of Singapore (MAS), with two new CBDC projects.
In the top 5 retail CBDCs are Nigeria, Bahamas, China, Jamaica and Eastern Caribbean, while on wholesale the main CBDC projects are owned by Thailand, Hong Kong, Singapore, Canada and France.
Also, stablecoin supply, a type of cryptocurrency designed to retain price stability with respect to a reference such as the US Dollar, the Euro, or the Yen, has exploded over the past 18 months. Stablecoins are seen as “the bridge” from cash to digital assets, enabling flexible and affordable transactions and enduring volatility in a way that other cryptocurrencies cannot.
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