History of CBDCs by country

From Wikipedia, the free encyclopedia

The history of central bank digital currencies (CBDCs) is a short, recent history. CBDCs are still in a conceptual stage, with many countries exploring their possible implementation.


Bahamas[]

On 20 October 2020, the Central Bank of the Bahamas introduced the "Sand Dollar" as a digital legal currency equivalent to the traditional Bahamian dollar.[1][2][3]

Brazil[]

In 2020, the Central Bank of Brazil announced plans for a digital currency by 2022, although these plans were pushed back by two or three years in 2021.[4]

China[]

Main article: Digital renminbi

Since 2014, China's central bank has been working on a project called DCEP (Digital Currency Electronic Payment) or digital renminbi,[5] often also referred to as the "digital yuan" as it would be backed by the yuan.[6]

At the end of 2017, the China’s central bank organized a number of banks and institutions to jointly develop the DCEP system. In April 2020, DCEP began to be tested in four big Chinese cities: Shenzhen, Suzhou, Xiong'an, and Chengdu.[7]

The Shenzen and Suzhou trials chose participants through a lottery, enabling them to use the DCEP in designated specific areas. The Shenzen trial only included online payment functionalities, generally using QR codes like Alipay and WeChat Pay. However, along with online payments, the Suzhou trials also enabled the users to make near-field communication (NFC) offline payments. This feature was originally designed for people in rural areas who do not have reliable internet access.[8]

After the successful CBDC pilot, Suzhou City Municipal signed a Memorandum of Understanding (MoU) with the New York-based blockchain startup, for the company to help the city in the development of products in the city.[9][10][11][12][13]

It is aimed to have the DCEP in use in time for the 2022 Winter Olympics.[6]

Ecuador[]

One of the earliest examples of retail CBDC was in Ecuador from 2014 to 2018, when the central bank created a broadly accessible pilot retail CBDC that operated through citizens' mobile phones (it did not employ blockchain technology). The program closed in part due to low citizen adoption.[14]

European Union/Eurozone[]

In the Eurozone, the Bank of Spain's former governor Miguel Angel Fernandez Ordoñez has called for the introduction of a digital euro, but the European Central Bank (ECB) has so far denied such possibility.[15] Nevertheless, in December 2019, the ECB stated that "The ECB will also continue to assess the costs and benefits of issuing a central bank digital currency (CBDC) that could ensure that the general public will remain able to use central bank money even if the use of physical cash eventually declines".[16] On 2 October 2020 the ECB nonetheless published a report on the proposed digital euro and kickstarted a phase of experiments to consider the merits of minting such a central bank digital currency. Based on this, it will then decide whether to pursue or abandon plans to issue a digital euro toward mid-2021.[17][18][19]

France and Switzerland[]

In June 2021, the Swiss National Bank and Bank of France launched a cross-border CBDC payments trial designed for wholesale (bank-to-bank, rather than with regular consumers) transactions. Switzerland had previously tested a digital Swiss franc for instant transactions on SIX Swiss Exchange, its premier stock exchange.[4]

Ghana[]

Further information: E-Cedi

India[]

In 2017, a high level inter-ministerial committee (IMC) was formed under Department of Economic Affairs under Ministry of Finance (MoF) on governance and usage of virtual currencies in India and recommended digital form of fiat currency using Distributed Ledger Technology (DLT). Department of Financial Services of MoF, Ministry of Electronics and Information Technology (MeitY) and Reserve Bank of India (RBI) were invited to form a special group that will look into legal and technological development of CBDC.[20] Without any official recognization to cryptocurrencies, RBI started planning on future CBDC development.[21]

The RBI on 16 December 2020 announced a regulatory sandbox to test next generation technologies on cross border payments to collect field test data and evidence of benefits and risks on the financial ecosystem.[22] On 29 January 2021, Union Government of India proposed a bill to ban trading and investments in cryptocurrencies while giving legal power to RBI for developing CBDC, termed as "programmable digital rupee" using the experience gained from handling Unified Payments Interface (UPI), Immediate Payment Service (IMPS) and Real-time gross settlement (RTGS) for distribution and validation purpose.[23][24]

As per Currency and Finance Report 2021 released by RBI, CBDC backed by the sovereign must promote non-anonymity of monetary transactions and financial inclusion by direct transfers. It must compliant with national and global anti-money laundering and financial-terrorism laws.[25] RBI was planning for initial stage of CBDC trials from December 2021.[26] But now it moved to Q1 2022 before nationwide rollout in phased manner.[27] As per Governor Shaktikanta Das, RBI is still discussing whether to go with a centralized system or use Distributed Ledger Technology.[28] While the preliminary study will be conducted soon, RBI started internal evaluation on scope, legal framework, calibration, technology, distribution and validation mechanism of CBDC citing increase in digital transaction during the COVID-19 pandemic.[29][30][31]

The Government of India is working on amendments for The Coinage Act, 2011,[32] Foreign Exchange Management Act (FEMA), 1999, Information Technology Act, 2000 and Crypto-currency and Regulation of Official Digital Currency Bill, 2021 that will govern CBDC in the country.[33][34]

The Department of Financial Services, Ministry of Health and Family Welfare and National Health Authority introduced e-RUPI on 2 August 2021 which is a prepaid person specific, purpose specific e-voucher based on QR code or SMS string that doesn't require bank account to make it leak proof. It is going to act as a precursor by highlighting the gaps in national digital payment infrastructure that needs further improvement before the nationwide launch of CBDC.[35][36] During Union Budget 2022, Ministry of Finance announced roll out of Digital Rupee from 2023.[37]

Iran[]

2016-2018 interest in CBDCs in Iran was alleged by American analysts to be for the purposes of evading American sanctions.[4]

Nigeria[]

In May 2021, the Central Bank of Nigeria announced that Nigeria would create a digital currency.[38] In July 2021 it further said that it will launch the pilot scheme on 1 October 2021.[39] Following these announcements, the central bank named Bitt Inc. in August 2021 as its technical partner for Nigeria's digital currency that would be known as eNaira.[40]

New Zealand[]

In September 2021, public consultation on a CBDC for New Zealand was opened by the Reserve Bank.[41] The potential digital currency would be tied 1:1 to the New Zealand dollar.[42]

Norway[]

In April 2021, after four years of research, Norway's Norges Bank announced plans to start testing technical solutions for a CBDC over the following two years.[4]

Russia[]

2016-2018 interest in CBDCs in Russia was alleged by American analysts to be for the purposes of evading American sanctions. In October 2020, the Central Bank of Russia published a consultation paper on a digital ruble. It aims to have a prototype ready by the end of 2021 and start pilots and trials in 2022.[4]

Sweden[]

The central bank of Sweden proposed an "e-krona" in November 2016,[43] and started testing an e-krona proof of concept in 2020.[44][45][46] The 2020 phase focused on internal simulations within Sweden's central bank; the 2021 second phase is to include transactions with outside entities, such as commercial banks.[4]

Turkey[]

In January 2021, the Central Bank of Turkey announced a planned digital currency trial in the second half of 2021.[4]

Ukraine[]

In December 2018, the National Bank of Ukraine piloted a digital currency, the e-hryvnia, with about 5,500 tokens. It is considering how to technically advance a nationwide launch.[4]

United Kingdom[]

The Bank of England discussed a blockchain-based central bank currency in a September 2015 speech by chief economist Andrew G. Haldane, on possible ways to implement negative interest rates.[47] A March 2016 speech by Ben Broadbent, the bank's deputy governor of monetary policy, appears to be the first use of the phrase "central bank digital currency", and notes direct inspiration by Bitcoin.[48][49] In April 2021, the Bank of England and HM Treasury announced a joint CBDC Taskforce to examine the possibility of a CBDC in the UK.[4]

United States[]

In May 2021, Federal Reserve Chair Jerome Powell announced plans to publish a discussion paper on central bank digital currency, focusing on the possibility of issuing a US CBDC. Powell believed that a potential CBDC would complement the use of cash and bank deposits rather than replacing them.[50] In February 2022 the Federal Reserve Bank of Boston released initial details of Project Hamilton, a potential United States CBDC. While incorporating some of the architecture of bitcoin, it would not be decentralized nor have mining.[51]

Also in May 2021, the Digital Dollar Project, which is not affiliated with the United States government, planned to launch five pilot programmes, testing the potential use of a central bank digital currency in the United States of America.[52]

Uruguay[]

In November 2017, the central bank of Uruguay announced to begin a test to issue digital Uruguayan pesos.[53][54]

Venezuela[]

Main article: Petro (cryptocurrency)

2016-2018 interest in CBDCs in Venezuela was alleged by American analysts to be for the purposes of evading American sanctions. To this end, Venezuela launched the blockchain-backed CBDC petro in 2018, although this project failed. Venezuela launched a digital currency—the petro—in 2018, which is purportedly backed by oil, natural gas, and mineral reserves and administered using blockchain technology. The petro has not been adopted for general use and may not truly function as a currency.[4]

References[]

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  53. ^ Uruguayan central bank to test digital currency - Agencia EFE, 20 September 2017
  54. ^ El BCU presentó un plan piloto para la emisión de billetes digitales - Central Bank of Uruguay, 3 November 2017
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