SCROLL TO EXPLORE
What is a Central Bank Digital Currency (CBDC)? A CBDC is virtual money backed and issued by a central bank. As cryptocurrencies and stablecoins have become more popular, the world’s central banks have realized that they need to provide an alternative—or let the future of money pass them by.
Hover over a country to see their status. Click on a country to learn more.
' ); let iframe = document.querySelector("#cbdc-tracker"); window.addEventListener( "message", function (e) { let message = e.data; iframe.style.height = message.height + "px"; iframe.style.width = message.width + "px"; }, false );
Key findings
130 countries, representing 98 percent of global GDP, are exploring a CBDC. In May 2020, only 35 countries were considering a CBDC. A new high of 64 countries are in an advanced phase of exploration (development, pilot, or launch).
19 of the G20 countries are now in the advanced stage of CBDC development. Of those, 9 countries are already in pilot. Nearly every G20 country has made significant progress and invested new resources in these projects over the past six months.
11 countries have fully launched a digital currency. China’s pilot, which currently reaches 260 million people, is being tested in over 200 scenarios, some of which include public transit, stimulus payments and e-commerce.
The European Central Bank is on track to begin its pilot for the digital euro. Over 20 other countries will take steps towards piloting their CBDCs in 2023. Australia, Thailand and Russia intend to continue pilot testing. India and Brazil plan to launch in 2024.
In the US, progress on retail CBDC has stalled. However, other G7 banks, including the Bank of England and the Bank of Japan are developing CBDC prototypes and consulting the public and private sectors on privacy and financial stability issues.
The US is, however, moving forward on a wholesale (bank-to-bank) CBDC. Since Russia’s invasion of Ukraine and the G7 sanctions response, wholesale CBDC developments have doubled. There are currently 12 cross-border wholesale CBDC projects.
Crossborder CBDC projects
Timeline: Race for the future of money
The ABCs of CBDCs
What is a CBDC?
A Central Bank Digital Currency (CBDC) is the digital form of a country’s fiat currency that is also a claim on the central bank. Instead of printing money, the central bank issues electronic coins or accounts backed by the full faith and credit of the government.
But don’t digital currencies already exist?
There are already thousands of digital currencies, commonly called cryptocurrencies. Bitcoin is the most well-known fully decentralized cryptocurrency. Another type of cryptocurrency are stablecoins, whose value is pegged to an asset or a fiat currency like the dollar. Cryptocurrencies run on distributed-ledger technology, meaning that multiple devices all over the world, not one central hub, are constantly verifying the accuracy of the transaction. But this is different from a central bank issuing a digital currency.
So why would a government get into digital currencies?
There are many reasons to explore digital currencies, and the motivation of different countries for issuing CBDCs depends on their economic situation. Some common motivations are: promoting financial inclusion by providing easy and safer access to money for unbanked and underbanked populations; introducing competition and resilience in the domestic payments market, which might need incentives to provide cheaper and better access to money; increasing efficiency in payments and lowering transaction costs; creating programmable money and improving transparency in money flows; and providing for the seamless and easy flow of monetary and fiscal policy.
What are the challenges?
There are several challenges, and each one needs careful consideration before a country launches a CBDC. Citizens could pull too much money out of banks at once by purchasing CBDCs, triggering a run on banks—affecting their ability to lend and sending a shock to interest rates. This is especially a problem for countries with unstable financial systems. CBDCs also carry operational risks, since they are vulnerable to cyber attacks and need to be made resilient against them. Finally, CBDCs require a complex regulatory framework including privacy, consumer protection, and anti-money laundering standards which need to be made more robust before adopting this technology.
What are the national security implications of a CBDC?
New payments systems create externalities that impact the daily lives of citizens, and can possibly jeopardize the national security objectives of the country. They can, for example, limit the United States’ ability to track cross-border flows and enforce sanctions. In the long term, the absence of US leadership and standards setting can have geopolitical consequences, especially if China and other countries maintain their first-mover advantage in the development of CBDCs. Our work on digital currencies at the GeoEconomics Center is at this nexus of the future of money and national security.
Research Team: Ananya Kumar, Alisha Chhangani, Greg Brownstein, and Phillip Meng
Contributions from: Nitya Biyani, Stefan de Villiers, Matt Goodman, Niels Graham, William Howlett, Amy Jeon, Reddy Lee, Roberto Lopez-Irizarry, Abhinav Vishwanath and Varsha Shankar
Sign up to receive emails on new research & reports, program highlights, and events.
Related content
Digital Currencies
Digital Currencies
As an expert in the field of Central Bank Digital Currencies (CBDCs), my deep understanding of this evolving landscape allows me to provide valuable insights into the concepts presented in the provided article.
The article discusses the global proliferation of CBDCs and provides key findings on the current status of CBDC exploration and development. Let's break down the main concepts addressed in the article:
-
Overview of CBDCs:
- A CBDC is a virtual form of a country's fiat currency, backed and issued by its central bank.
- It serves as a digital claim on the central bank, eliminating the need for physical money printing.
-
Global CBDC Trends:
- The article mentions a significant increase in CBDC exploration, with 130 countries (representing 98% of global GDP) currently considering or actively exploring CBDCs.
- The number of countries in advanced phases of CBDC development, including the pilot or launch stages, has reached 64, with 19 G20 countries actively involved.
-
Current CBDC Deployments:
- Eleven countries have fully launched a digital currency, with China's pilot program reaching 260 million people and being tested in various scenarios, including public transit, stimulus payments, and e-commerce.
-
Future CBDC Developments:
- Several countries, including Australia, Thailand, and Russia, plan to continue pilot testing.
- India and Brazil have intentions to launch CBDCs in 2024.
-
US CBDC Progress:
- The article notes that progress on retail CBDC in the United States has stalled. However, there is movement in developing wholesale (bank-to-bank) CBDCs.
-
Cross-Border CBDC Projects:
- In the wake of geopolitical events like Russia's invasion of Ukraine and G7 sanctions, there has been a doubling of cross-border wholesale CBDC projects, with 12 projects currently in progress.
-
Motivations for CBDC Adoption:
- Various motivations drive countries to explore CBDCs, including promoting financial inclusion, enhancing domestic payment market competition, increasing efficiency, creating programmable money, and improving transparency in money flows.
-
Challenges of CBDC Implementation:
- Challenges include the potential for a run on banks if citizens withdraw too much money at once, operational risks related to cyber attacks, and the need for a robust regulatory framework covering privacy, consumer protection, and anti-money laundering standards.
-
National Security Implications:
- CBDCs have national security implications, impacting the ability to track cross-border flows and enforce sanctions. The absence of US leadership in CBDC development could have long-term geopolitical consequences.
-
GeoEconomics Center's Work:
- The GeoEconomics Center is actively engaged in researching the intersection of digital currencies, the future of money, and national security.
In conclusion, the provided article offers a comprehensive overview of the current state of CBDCs globally, covering trends, developments, motivations, challenges, and national security considerations. The insights provided underline the dynamic nature of the CBDC landscape and its potential implications on the future of global finance.
