Estimated reading time: 3 minutes

According to a study released on Wednesday by the US-based Atlantic Council think tank,  130 nations, representing 98% of the global economy, are currently exploring digital variants of their currencies. Nearly half of these countries have reached advanced stages of development, pilot testing, or even launched their digital currencies. 

The research highlighted the significant progress made over the past six months, indicating that all G20 countries, except Argentina, have entered one of these advanced phases. Among these nations, eleven, including various Caribbean countries and Nigeria, have already introduced their central bank digital currencies (CBDCs), while China’s pilot testing now encompasses 260 million individuals and encompasses a wide range of scenarios, from e-commerce to government stimulus payments.

India and Brazil, two prominent emerging economies, have also announced plans to unveil their digital currencies in the coming year. The European Central Bank is set to commence a digital euro-pilot and aims for a potential launch in 2028, while more than 20 other countries plan to take significant strides towards pilot programs this year.

However, in the United States, progress towards a digital dollar is limited to a wholesale (bank-to-bank) version, as stated by the Atlantic Council’s research. 

The development of a retail version for broader public usage has come to a “stalled” phase. In March 2022, US President Joe Biden instructed government officials to evaluate the risks and benefits associated with creating a digital dollar.

The weight and influence of the dollar in the global financial system mean that any move by the United States in this direction could have important ramifications. Nevertheless, the Federal Reserve indicated in January that it is the role of Congress, not the central bank, to decide on the launch of a digital dollar.

The worldwide surge in interest for CBDCs is occurring as physical cash usage diminishes, and authorities seek to counter the perceived threat to their money-printing authority posed by cryptocurrencies like Bitcoin and large technology companies. 

Another driving factor has been the imposition of sanctions on countries such as Russia and Venezuela in recent years, prompting even longstanding US allies like Europe to strive for alternatives to the traditional Visa, Mastercard, and Swift payment networks.

The Atlantic Council noted that “wholesale CBDC developments have doubled” since Russia’s invasion of Ukraine and the subsequent G7 sanctions response. Additionally, the study revealed that there are currently 12 multi-country “cross-border” CBDC projects in progress. Among European nations, Sweden remains at the forefront with its advanced CBDC pilot, while the Bank of England is actively pursuing the development of a potential digital pound, anticipated for use by the second half of this decade.

This year, Australia, Thailand, South Korea, and Russia have all expressed their intentions to continue pilot testing of CBDCs.

Despite the increasing interest in CBDCs, some countries that have launched their own digital currencies, such as Nigeria, have experienced disappointing adoption rates. Moreover, both Senegal and Ecuador have terminated their development efforts.