Emerging Economies Surpass Advanced Counterparts in the CBDC Development Race

Emerging nations surge with 11 CBDCs launched or piloted, while advanced economies lag in experimentation.
Countries like the Bahamas, Jamaica, Nigeria, and ECCU drive CBDC adoption, leveraging agile frameworks for swift implementation.
Merely three countries have successfully introduced CBDCs, notably China’s digital Yuan, which has witnessed transactions surge to 1.8 trillion yuan by June 2023.

Emerging economies are charging ahead in the global Central Bank Digital Currency (CBDC) race, leaving advanced counterparts scrambling to catch up. The latest Atlantic Council CBDC Tracker findings revealed that 11 emerging nations have already launched or piloted CBDCs, starkly contrasting to the 8 advanced economies still in experimental phases.

Countries like the Bahamas, Jamaica, Nigeria, Anguilla, and the Eastern Caribbean Currency Union (ECCU) spearhead this digital transformation. Their agile, economic ecosystems and streamlined regulations enable swift implementation, propelling them to the forefront of CBDC adoption.

Conversely, advanced economies cautiously approach CBDCs, wary of disruptions to established banking systems and monetary policies. Heavyweights like the US and the UK are meticulously researching the CBDC landscape, prioritizing thorough analysis before venturing into digital currencies. The Atlantic Council CBDC Tracker also revealed collaborative efforts, exemplified by the Stella project involving the European Central Bank, the Federal Reserve, and the Bank of England, alongside Project Jura, connecting France and Switzerland, and Project Icebreaker, uniting Israel, Norway, and Sweden.

While 130 economies explore CBDCs, only three have fully deployed digital currencies, with nine in experimentation. Pioneers such as the Bahamas, Jamaica, and Nigeria launched CBDCs in 2020, 2021, and 2022 respectively. The Bahamas holds the distinction of introducing the world’s first CBDC, “the Sand Dollar” in October 2020. Meanwhile, China’s digital Yuan (e-CNY) leads late-stage trials, witnessing transactions soar to 1.8 trillion yuan by June 2023, up from 100 billion yuan in August 2022.

Other major economies like South Korea, Japan, and Canada are deeply engaged in CBDC pilots. The Bank of Korea plans a public CBDC test in 2023, while Canada’s Project Jasper partners with Singapore’s Project Ubin for cross-border exploration.

In contrast, the US, EU, and UK cautiously navigate CBDC development. The US concluded Project Hamilton research in 2022 without imminent pilot plans. The EU’s digital Euro initiative aims for investigative closure by October 2023.

CBDCs respond to the digitization surge and declining physical cash use. Central banks consider them vital for controlling monetary policy and payments in the digital realm, safeguarding against disruptive forces. CBDCs bolster cross-border transactions, fortifying a currency’s global status. China’s digital yuan success motivates others. CBDCs ensure financial sovereignty and modernize outdated systems, introducing novel features such as programmable CBDCs and direct monetary stimulus transmission.