Cryptocurrency

Can the US Catch Up With Global CBDC Projects?

2022 kicked off with a wave of CBDCs as a number of national pilots came on the scene. The United States, on the other hand, appeared to fall behind countries in the CBDC race.

A Quick CBDC Update

Data from the Atlantic Council, the Central Bank Digital Currency (CBDC) tracking platform, indicates that as of January, CBDC projects were fully launched in 11 countries and piloted in other 11 countries.

The remaining countries on the list, including the US, are either exploring and developing the CBDC infrastructure or pending the project.

India is one of the most active countries to pilot the digital rupee. By the end of 2022, the Reserve Bank of India (RBI) piloted both wholesale and retail CBDC in an effort to remove the cryptocurrency.

According to a new update from the bank in January, the experiments will give better insights into wholesale and retail pilots, providing a space for improvements and enhancements for the coming projects.

The digital rupee is aimed at similar characteristics as the bank notes. This means it also functions in accordance with the current regulations, just like legal tender.

“The CBDC’s retail pilot will provide the public with a risk-free medium of exchange as it represents a direct liability of the central bank, with features of physical cash like trust, safety and immediate settlement finality in digital transactions,” the RBI noted in Financial Stability Report.

The initial pilot is only available for a number of select banks in India. As the RBI expands further experiments, we likely see other financial institutions participating throughout the year.

India, together with China and Japan, has achieved significant steps toward the full development of their CBDC pilots.

The next step is to expand the exploration of use cases, designs, as well as additional features. China has conducted experiments on digital yuan, or e-CNY, in several provinces, including domestic and cross-border payments.

Transactional tests during the pilot period typically consist of the launch of CBDCs between central banks and domestic commercial banks, cross-border payments between commercial banks, and cross-border foreign exchange.

A Lot Going On!

Following in the footsteps of China and other nations, Turkey’s central banks are apparently preparing to issue CBDC (Dijital Türk Liras).

The implementation is expected this year. The central bank also stated in a press statement last week that the first transaction on the CBDC infrastructure had been completed successfully.

The work that has been done so far on the legal, economic, and technological aspects of digital currency will continue at the Turkish central bank. The institution will make the results of the tests and their overall conclusions public in a methodical manner.

How The US Keeps Pace

The US approach, on the other hand, is extremely cautious. Though regulators accelerated the project’s development during the previous year, the US CBDC initiative is still in the development phase.

Last year, the US Federal Reserve (FED) released its long-awaited study on the digital dollar, which focuses on exploring the possibility of the issuance of the digital dollar.

The ongoing experiment backed by the FED and the Monetary Authority of Singapore is focused on both the use cases of CBDC.

Participants of the test include BNY Mellon, Citigroup, PNC, TD Bank, Truist, U.S. Bank, Wells Fargo, Mastercard, and SWIFT. FED is planning to launch a proof-of-concept test following the initial project, the viability of digital currencies working in a system of financial institutions.

Advocates for the digital dollar are concerned that the Fed’s delay in launching the currency will put it behind its worldwide competitors, who have already launched their own products.

However, Powell and other Fed officials say they are unconcerned about the project’s speed, emphasizing the need of getting it back on track as soon as feasible.

The post Can the US Catch Up With Global CBDC Projects? appeared first on Blockonomi.

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With 5 years of experience as an editor, Matthew has been a crucial part of TheTechly since its inception. He looks after the editing of news content published on TheTechly. Apart from investing his time in editing, he also provides well-researched news articles for the U.S. niche.
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