CBDC front runners
by Chris Papadopoullos, Pierre Ortlieb and Levine Thio
Advanced digital currency projects aren’t limited to advanced economies
Several advanced and prominent central bank digital currency initiatives are setting the global standard in research, identification of credible policy objectives, use cases and technological design. These projects are also among the first to outline approaches to the on-the-ground realities and practicalities of implementation.
The People’s Bank of China’s digital currency/electronic payment project is by far the biggest in scale and furthest along in implementation. The PBoC is working alongside private sector players to distribute digital M0 among its population. The most recent joint venture is with the Society for Worldwide Interbank Financial Telecommunication, where SWIFT will obtain a local licence and manage local network management activities, all in compliance with Chinese regulations. Despite the scope of SWIFT’s activities, which are limited, it signals China’s growing intention explore how their systems could integrate with global payment infrastructure.
Cambodia is another country taking a public-private approach. Its Bakong initiative, however, is not purely a CBDC system. Instead, it is working to reinvent its core infrastructure, allowing more payment players to participate, generating greater innovation and competition.
The Swedish Riksbank was an early explorer of retail CBDC, identifying a strong policy objective and use case amid the declining use of cash. One important objective of the e-krona project is to solve issues with bank deposit disintermediation. The project remains under review, however, as the benefits are debated in government.
The Monetary Authority of Singapore has made iterative progress on its project since 2016. The focus now is on using its payment network prototype, developed in collaboration with JPMorgan and Temasek, to continue to serve as a test network. It will facilitate collaboration with other central banks, as well as the financial industry as they work together to develop next generation cross-border payment infrastructure.
The Bahamas’ sand dollar project offers a number of big lessons for implementing a CBDC and tackling on-the-ground realities of deployment during a pandemic. The result has been a number of novel innovations which tackle offline payment and settlement issues, ensuring inclusion through low-cost access and creating a resilient network.
These countries are leading the world when it comes to CBDC, providing a guide for how others could develop their own projects.
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Πηγή: omfif.org
