More and more central banks around the world are developing their own digital currencies. Such a currency is also called a central bank digital currency, or a CBDC. This year in particular, developments are moving fast; China, for example, has almost finished its version of a CBDC. How are things going with that? And what other superpowers are developing their own currencies? An update.
Chinese digital yuan almost finished
The Central Bank of China, the PBoC, has been developing a CBDC for some time. The PBoC is now testing the digital currency and found a creative way to do so a fortnight ago.
On Sunday, 11 October, the central bank held a kind of airdrop, with which two million Chinese from the city of Shenzen could participate. A total of 10 million digital yuan (approximately EUR 1.25 million) was distributed over 50 000 wallets. These lucky Bitcoin Machine review inhabitants can now spend this digital money in more than three thousand shops.
It seems that China will be the first superpower to have its own digital currency, although it remains to be seen when it will be officially launched.
European Central Bank is investigating
The European Central Bank (ECB) is showing an interest in digital currencies. On the ECB’s website, we can find that the central bank is investigating the possibility of launching a digital euro.
At the beginning of October, the ECB published a 55-page research report. They are not yet in the process of developing a digital currency, which is likely to happen in the middle of 2021.
On Monday 12 October, the ECB launched a public enquiry. Europeans can indicate what they think of a digital euro, and what characteristics it should have. This can be done until 12 January 2021.
Europe is therefore lagging a little behind China, which already has almost a working product.
America is also still in the experimental phase.
The United States, like Europe, is still experimenting. Jerome Powell is the President of the Federal Reserve, the Central Bank of America. In an online panel discussion this week, he said: „It takes time and a lot of work to prepare for a digital dollar and to bring every stakeholder on board. It is more important for America to prepare this process well than to be the first“.
Governor Lael Brainard of the Federal Reserve gave a state of play speech on 13 August this year. According to him, there have been several experiments with digital currencies in recent years. It is still searching for the right form.
According to Anthony Pompliano, bitcoin investor of the first hour, the Fed has to hurry so as not to lag behind China. He said so in his podcast of 19 October: „They are talking about a period of a few years. But if they do not act now, the United States will lag behind China, because it all comes down to accessibility“.
Smaller countries already have their own currency
With 1.4 billion and 741 million inhabitants respectively, we can imagine that thorough research is needed to launch a digital currency in China and Europe.
However, there are also countries with far fewer inhabitants, which have already launched a digital currency.
We wrote earlier this week about the Central Bank of the Bahamas, which has launched the Sand Dollar. Already this week, 385 000 citizens can open an account to carry out transactions with the Sand Dollar. The Bahamian Central Bank has launched the currency to replenish cash and improve the country’s existing payment system.
A slightly larger archipelago is the Marshall Islands. This currency is issued through the blockchain of Algorand. So far, the archipelago has been dependent on the dollar, but with the Sovereign (SOV) they are taking control. There is only one stumbling block: the government is still in conclave as to whether the country should issue the currency. If they give the green light, then the pre-sale can begin.
Is a CBDC a threat to cryptocurrency?
It is difficult to say. What is clear is that governments can hardly ignore bitcoin.
In addition to private investors, more and more listed companies also dare to convert their cash reserves to bitcoin. Even earlier opponents, such as PayPal, dare to offer bitcoin and cryptocurrency, although there are hurdles. These developments make it increasingly difficult for governments to ban bitcoin.
In any case, we are curious to know which large country will be the first to launch a CBDC, and what the consequences will be. We will keep an eye on developments for you!