Countries Developing a Central Bank Digital Currency (CBDC)

A central bank digital currency (CBDC) is a digital form of cash issued by a nation's central bank. Digital forms of currency are already widely used today. 

When you swipe your debit or credit card instead of using cash, or when you are paid via direct deposit, the associated financial institution must digitally record the transaction and update your account balance.

A CBDC would support systems already established by private financial institutions by issuing a digital fiat currency that has the full backing of a central bank. 

In most countries, the only type of central bank money available to the public are physical bank notes.

Interest in CBDCs has skyrocketed in recent years. According to the Atlantic Council—an independent think tank headquartered in Washington, D.C.—a total of 87 countries are exploring issuing a CBDC as of March 2022. Less than two years prior, in May 2020, just 35 countries were considering a CBDC.1

This article will focus on some of the largest countries currently developing a CBDC.

The number of countries considering launching a CBDC has soared in the past two years.

Russia and India have already launched pilot CBDCs that are currently being tested.

The U.S. has no set plans to issue a CBDC, but the Federal Reserve recently invited the public to begin an open discussion about the value of a CBDC in the U.S.

The announcement came after a number of conflicting reports from the country's central bank, beginning in 2018 when it threatened to ban all private cryptocurrencies from being traded in India. That law was struck down in March 2020 by India's Supreme Court.34 

Details regarding India's CBDC are scarce, but Sitharaman stated that a CBDC will boost India's economy, increase efficiency and decrease costs of the country's currency management system, and provide a stable, regulated digital currency that will counter private cryptocurrencies.2

In a speech delivered on Feb. 14, 2022, Shri T Rabi Sankar, deputy governor of the RBI, expressed concern that the wide adoption of private cryptocurrencies would "undermine the ability of authorities to control money supply or interest rates."5

At the same time that it announced a digital rupee, India reported that it would be taxing private cryptocurrency transactions at a flat rate of 30%.

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