According to a highly watched research released on Thursday, 134 nations, or 98% of the world’s economy, are currently investigating digital versions of their national currencies, with more than half of them in advanced development, pilot, or launch stages.

All of the G20 nations, with the exception of Argentina, are currently in one of those protracted phases, according to research by the U.S.-based Atlantic Council think tank. However, the United States is noticeably lagging behind.

A “wholesale” digital dollar for banks only was still gaining traction, but the article stated that the digital dollar for the general American public now appeared “stalled,” with Federal Reserve Chairman Jerome Powell stating earlier this month that “nothing like that is remotely close to happening.”

President of the United States Joe Biden directed officials to investigate the possibility of a digital dollar in 2022, but it has since become a contentious political issue because Biden’s opponent in this year’s election, Republican Donald Trump, has vowed to oppose it.

Josh Lipsky of the Atlantic Council stated, “The biggest headline here is that the divergence between the world’s largest central banks over CBDCs (Central Bank Digital Currency) is growing,” highlighting how much more advanced China, Europe, and Japan were.

Proponents claim that digital currencies will open up new possibilities and offer a substitute for currency, which is dying. However, they have also fueled protests over possible government spying in several other countries.

“A more fractured international payments system” was the risk of the United States falling behind, Lipsky continued. Washington might also lose some of its influence in global banking if other nations push ahead and establish the new guidelines for CBDCs.

There are currently 36 pilot programmes in operation, including as China’s e-CNY, which is being tested by 260 million people in 25 cities, and the European Central Bank’s (ECB) six-month “preparation” work for the digital euro.

The Eastern Caribbean Currency Union (ECCU), which is made up of eight countries, just became the first to shut one off after issues prevented users from using digital wallets. However, the Bahamas, Jamaica, and Nigeria already have theirs fully operational.

The paper also demonstrated how, following Russia’s invasion of Ukraine in 2022 and the ensuing G7 sanctions response, activity on wholesale CBDCs had increased.

There are presently thirteen cross-border wholesale projects in progress, one of which is called “mBridge” and links China, Thailand, the United Arab Emirates, and Hong Kong. This year, it will also expand to eleven more as-yet-unnamed countries.

The BRICS countries—Brazil, Russia, India, China, and South Africa—are all advanced, and Lipsky forecast that the group will push for non-dollar payment methods at this year’s conference in Russia.

They all might be included in a wave of significant announcements by 2027, as would the ECB, whose present trial programme is thought to offer a model for other developed large economies.

Despite being tested for a variety of purposes, including purchasing precious metals and oil, Covid checks and public transit tickets, China’s digital yuan remains the biggest and most sophisticated pilot programme.

When will China introduce the e-CNY officially? That is the query, Lipsky remarked. Maybe 2025 or 2026, but not this year? It’s challenging to determine.”

(Adapted from Reuters.com)

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