The Bank for International Settlements, or BIS, stated that more than half of the world’s central banks are inventing digital currencies or conducting concrete tests on them – something that would have been inconceivable only a few years ago.
E-currency Issued by the Government Appears to be a Viable Option
A poll of 81 central banks, performed last autumn but only published now, indicated that 9 out of 10 were looking into CBDCs. The progress surprised many people. According to Ross Buckley, it is surprising that almost 90% of central banks are working on CBDCs. This field has shown phenomenal year-over-year growth.
According to Franklin Noll, what surprised me the most was how quickly emerging economies were going toward retail CBDCs. A year ago, central banks in developed economies had a permissive attitude toward CBDCs, seeing them as neither necessary nor deserving much scrutiny.
According to the report, momentum accelerated last year. Next, in 2021, Nigeria will introduce its electronic currency (eNaira) to replace the Sand Dollar released by the Bahamas in 2020. However, China and the Eastern Caribbean have also launched pilot versions of their cryptocurrencies, DCash, and e-CNY.
The Bahamas Struggle, Sweden Mulls, and Chile Waits
An effective CBDC may be more difficult to achieve than first thought. According to the IMF, only 0.01% of Bahamian cash is made up of the new digital currency, and there are few ways to utilize the Sand Dollar in that island country. According to the International Monetary Fund, government-issued digital currencies may face similar difficulties in terms of public awareness-raising.
One of the world’s most progressive governments in terms of digital currency study is Sweden’s Riksbank. E-krona started in 2017, and the second part of a pilot program beginning in 2020 has now begun. Some central banks might desire to introduce a CBDC, but the Riksbank is motivated by the declining cash utilization in Sweden, says Carl-Andreas Claussen.
Sweden is on its way to becoming the first cashless society in the Western world. As per the Riksbank, the percentage of Swedes who use cash declined from 39% to 9% between 2010 and 2020. However, this presents some concerns.
Claussen told Cointelegraph that the public wouldn’t have central bank money if currency vanishes. That’ll depart from Sweden’s history during the last 400 years. The Riksbank will issue an electronic currency, the e-krona, for the general population.
Sweden has yet to make any decisions. Claussen stated that it is unclear whether you will need it. So, first, we must determine whether we require it and whether doing so is worthwhile. We haven’t arrived yet.
Claussen is confident that it will be successful if a contemporary government chooses to issue digital money. Besides, it must be certain that you need a CBDC. He said that the Riksbank and other major central banks have not determined whether to issue CBDCs. Not even China, right? He said that they have not made any final decision.