Figure 1: Timeline of CBDC research and experiments in various countries
PBoC’s CBDC research group was established
2014
Research on CBDC was published and two prototypes were made
2015
PBoC announced that it would issue CBDC
2016
Bank of Canada launched project Jasper
BoE included CBDC in its 2015 research agenda
MAS announced launching of project on a DLT- based payment system
Trial run of digital bank acceptance exchange
2017
The Riksbank released the first report on e-krona
Shenzhen and Nanjing research institutes were set up
2018
PBoC announced that DC/EP will soon be released
2019
Facebook announced the Libra project
BoE said to consider DLT- based settlement
Central bank of Uruguay announced a CBDC plan
ECB confirmed its work on a digital euro
Bank of Thailand initiated CBDC project
Bank of France launched
ECB and BoJ launched project Stela to explore DLT
MADRE using DLT
The Fed conducted experimentation with MIT
BoJ set up a new team to study digital currencies
Sources: Deutsche Bank, Goldman Sachs and various websites
DC/EP pilot launched
2020
The Riksbank announced the launch of pilot e-krona
Bank of France started working on CBDC experiment with eight firms
digital real may be ready for entry into mass circulation as early as 2022.3
“To
have a digital currency, you need an instant payment system that is efficient and interoperable; an open system, where you can create competition; and a currency that has credibility, is convertible and international,” he added. As part of its digital agenda, in February 2020 the BCB launched its official payment network, Pix, for instant money transfers and QR code scanning. Mass adoption of Pix is scheduled during 2021 and last October, Brazil’s Economy Minister, Paulo Guedes, announced that the initial public offering of the digital bank Caixa Econômica Federal was provisionally pencilled in for April 2021 (although this has now been put back to “early 2022”4
).
Fed and ECB more circumspect By contrast, in the US the Federal Reserve (Fed) declares itself to be unperturbed by such progress elsewhere in the world and under no pressure to respond with a Fed-backed CBDC. Fed Chairman Jerome Powell maintains that a launch
52
should go ahead only once concerns over potential vulnerability to cyberattacks and counterfeiting are addressed. “This is one of those issues where it’s more important for the US to get it right than to be the first,” he told the IMF in October 2020. More recently, Powell has spoken of it taking “years rather than months” until the Fed is ready, adding that, in the meantime, it is investing heavily in the supporting technology and addressing the questions posed by CBDCs.
The European Central Bank (ECB) has also been studying the concept of a CBDC, which it believes could mitigate the risks to financial stability and monetary sovereignty posed by private cryptocurrencies.5
It
published a draft report in October 2020 and is expected to clarify its attitude towards a digital euro by summer 2021. In January 2021, ECB President Christine Lagarde spoke of a digital euro being launched within five years,6
It’s more important for the US to get it right than to be the first
Jerome Powell, Chair, Federal Reserve on central bank digital currencies
bitcoin, adding: “For those who assumed it might turn into a currency – terribly sorry, but this is a highly speculative asset which has conducted some funny business and some interesting and totally reprehensible money-laundering activity.”
although she
noted that it will “take a good chunk of time to make sure it’s safe”. Participating in an online conference organised by Reuters, she also called for global regulation of
There have also been calls for the Bank of England (BoE) to be at the forefront of developing a digital pound. Like the ECB, the Bank has been reviewing the possibility of a digital version of its currency for
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