Global Central Bank Digital Currency (CBDC) Boom, China Leads the Way

Global Central Bank Digital Currency (CBDC) Boom, China Leads the WayAccording to Reuters on September 17, 2023, 134 countries and regions (representing 98% of global economic output) are exploring digital versions of their local currencies. Almost half of them are in a more mature stage

Global Central Bank Digital Currency (CBDC) Boom, China Leads the Way

According to Reuters on September 17, 2023, 134 countries and regions (representing 98% of global economic output) are exploring digital versions of their local currencies. Almost half of them are in a more mature stage. Pioneers like China, the Bahamas, and Nigeria are already seeing increased usage of their digital currencies.

The Atlantic Council, a US-based think tank, released findings on September 17 showing that all G20 nations are exploring CBDCs, with a total of 44 piloting the use of such currencies. This is higher than the 36 a year ago and is part of a global movement by authorities to address declining cash usage and the threat to their printing rights posed by Bitcoin and large tech firms.

Josh Lipsky and Ananya Kumar of the Atlantic Council point out that one of the most notable new developments this year is the significant increase in CBDCs in the Bahamas, Jamaica, and Nigeria. These countries have formally launched their CBDCs. Officials say China, which is implementing the world's largest pilot program, has also seen its digital yuan transactions nearly triple to 7 trillion yuan.

Lipsky stated, "There's been a saying that countries and regions launching CBDCs aren't seeing much or any usage, but over the last few months, we've seen real growth." He also predicted, "My prediction is that the People's Bank of China (PBOC) will be close to full launch within a year."

Beyond these pioneers, other countries are making progress. For example, the European Central Bank has launched a multi-year digital euro pilot program. The US, which has lagged behind in the digital dollar, has joined a cross-border CBDC project along with six other major central banks.

This global CBDC boom is primarily driven by several factors:

• Declining cash usage: With the rise of mobile payments and e-commerce, paper money and coins are becoming increasingly less used. CBDCs can serve as a safer and more convenient payment method to replace cash.

• Threat from Bitcoin and large tech companies: The emergence of digital currencies and payment platforms like Bitcoin and large tech firms poses a challenge to central bank monetary sovereignty. CBDCs can help central banks maintain their monetary policy independence and control the stability of the financial system.

• Improved payment efficiency and security: CBDCs can enable more efficient and secure payment systems and promote financial innovation, bringing more benefits to society.

While the potential of CBDCs is vast, they face several challenges:

• Privacy protection and data security: The implementation of CBDCs needs to address issues related to user privacy protection and transaction data security.

• Financial system stability: Widespread adoption of CBDCs could potentially disrupt the existing financial system, requiring careful regulation and management.

• Technology development and infrastructure construction: The development and deployment of CBDCs require significant investment in technology and human capital, requiring collaboration between governments and businesses.

Overall, CBDCs are an important trend in the future development of finance. Global exploration and practice will drive the development of digital currency technology, bringing new changes to the global financial system. China, as a pioneer in digital renminbi, its experience and technology will provide valuable reference and guidance for other countries.