CBDC: Europe and the US investigate, while in Nigeria it is a reality
CBDC: Europe and the US investigate, while in Nigeria it is a reality
Fintech

CBDC: Europe and the US investigate, while in Nigeria it is a reality

By Stefania Stimolo - 26 Oct 2022

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Central Bank Digital Currencies continue to interest countries around the world, with some like Nigeria having already issued their own CBDCs and others like the US and Europe investigating and proceeding with internal pilot projects. 

CBDCs in the world: Christine Lagarde’s statement on the digital euro

The general situation of CBDCs in the world sees the two powers of Europe and the US investigating the topic, without yet taking a position of implementing the digital currency. 

Just last week, Christine Lagarde, President of the ECB made a statement at the forty-sixth meeting of the International Monetary and Financial Committee, also discussing CBDCs. 

In fact, Lagarde said that the ECB continues to support the G20 initiative to make international payments faster, cheaper, safer and more inclusive. In this regard, regarding the digital Euro, the President went on to mention the CBDC as follows:

“For the Eurosystem, the motivation behind the digital euro project is mainly domestic in nature. However, we recognise the benefits of discussing various issues at the international level, such as cross-currency payments made in retail central bank digital currency (CBDC) and the potential effects of giving foreign users access to domestic retail CBDC under specific conditions. In this regard, international cooperation on digital currencies will remain essential.”

CBDC and the considerations of the Federal Reserve

Like Europe, the United States of America has not yet decided whether or not to continue with the implementation of the US dollar, while remaining open to evaluating various discussions. 

Last summer, the Federal Reserve had published its version on the matter, confirming that it was exploring the potential benefits and risks of CBDCs from various angles, including through research and technological experimentation.

However, despite the in-depth study, at the moment it appears that the Fed does not believe that CBDC can improve “the already safe and efficient US domestic payments system.”

Nigeria and the countries where Central Bank Digital Currencies are already a reality

The list of countries where CBDCs have already been launched is provided by the Atlantic Council, which states that there are a total of as many as 11 states in the world that have already launched a Central Bank Digital Currency and they are:

  • Bahamas 
  • Caribbean (with 8 states)
  • Nigeria
  • Jamaica

And indeed the eNaira, the first CBDC from an African country, appeared in Nigeria in October 2021. 

It is a centralized digital currency, now seeking to increase its adoption with a population that already uses Bitcoin as a means of payment, especially for remittances. To use eNaira, Nigerians must download the appropriate app. 

The Bank of Jamaica (BOJ), on the other hand, had announced that it had successfully completed the pilot project for its CBDC on exactly the last day of 2021, launching the national roll-out this 2022. 

The list of countries that are developing the digital currency 

Following the list proposed by the Atlantic Council, there is then a number of countries that are instead in a development phase of their CBDC. 

Among the 26 countries in the world in this situation are Australia, Canada, India, Turkey and Brazil. 

The Reserve Bank of Australia (RBA) reportedly announced the launch of a pilot project to test the issuance of a CBDC last summer. The project is expected to last for about a year and will develop a pilot CBDC on a limited scale, operating in sectors targeted by specific use cases selected by the Bank. 

In Brazil, however, Central Bank President Roberto Campos Neto has proposed the Digital Real as a guarantee and backing for other stablecoins launched by the country’s other banks. Thus, a CBDC is being experimented with as a wholesale currency

Singapore is in favor of wholesale CBDC

For its part, Singapore held the Global CBDC Challenge last year, organized by the Monetary Authority of Singapore (or MAS), which selected 15 companies to help build a domestic retail digital currency. 

Yet the MAS itself later clarified its position on the matter, saying it saw good potential for the Central Bank Digital Currency at wholesale, but not at retail. 

Singapore was thus selected as that country testing CBDC pilot projects. In this regard, Malaysia, Thailand, Russia, Saudi Arabia, South Africa, and South Korea are also in the same position. 

Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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