A new study by the Atlantic Council has revealed a dramatic rise in global interest in central bank digital currencies (CBDCs). According to the survey, some 134 countries and currency unions, representing 98% of global GDP, are now exploring this financial innovation – a jump from just 35 countries in May 2020. Out of these, 66 countries are in advanced phases of exploration, such as development, pilot testing, or even full-scale launches.
“There has been a narrative that the countries that have launched CBDCs have seen low or no usage,” said the Atlantic Council’s Josh Lipsky. “But in the last months, we have seen a real uptake.”
CBDC 101
A CBDC represents the digital form of a country’s fiat currency and serves as a claim on the central bank. Unlike traditional printed money, CBDCs are issued as electronic coins or accounts backed by the government’s full faith and credit.
All G20 nations are investigating CBDCs, with 19 of them reaching advanced exploration stages. Thirteen of these countries, including Brazil, Japan, India, Australia, Russia, and Turkey, have moved to the pilot stage, testing digital versions of their currencies. Meanwhile, three countries, The Bahamas, Jamaica, and Nigeria, have already launched CBDCs. In both The Bahamas and Nigeria, the issuance and adoption of CBDCs have surged as authorities work to expand the usage of these digital currencies domestically.
The number of ongoing CBDC pilots globally has reached a new peak of 44, including prominent projects like the digital euro. Across Europe, countries within and outside the Eurozone are increasingly experimenting with wholesale CBDCs, focusing on both domestic and cross-border applications. The original BRICS member states, Brazil, Russia, India, China, and South Africa are also actively piloting CBDCs as part of a broader strategy to develop an alternative payment system that reduces dependency on the US dollar.
In countries where retail CBDC projects are in advanced stages, digital currencies are being distributed through a network of banks, financial institutions, and payment service providers. The US, while cautious about retail CBDCs, has joined Project Agorá, a cross-border wholesale CBDC initiative involving six other major central banks. However, in May, the US House of Representatives passed a bill banning the direct issuance of a retail CBDC, and the matter remains undecided in the Senate, keeping CBDCs a contentious issue in the ongoing presidential campaign.
The geopolitical landscape, especially following Russia’s invasion of Ukraine and the subsequent G7 sanctions, has driven a surge in cross-border wholesale CBDC projects. These initiatives have more than doubled, reaching 13 today. One of the leading projects, known as mBridge, links the CBDCs of China, Thailand, the UAE, Hong Kong, and Saudi Arabia, with further expansion anticipated this year.
China’s digital yuan, or e-CNY, continues to lead as the world’s largest CBDC pilot. By June 2024, the e-CNY had reached a transaction volume of CNY7 trillion ($986bn) across 17 provinces, covering sectors such as education, healthcare, and tourism. This figure is almost four times the CNY1.8 trillion ($253bn) recorded a year earlier by the People’s Bank of China, highlighting rapid growth in the use of digital currency in the country.
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