The year 2020 is going to go down in human history as one that was characterized by a lot of important events. The US Presidential Elections, the Coronavirus Pandemic, US-China Trade Wars, and several other important markers defined the year.
Another reason why 2020 was an important year was because of the incredible rise of Bitcoin! The new financial asset took the world by storm and grew nearly 400% in late December 2020. As we speak, Bitcoin crossed the $28K mark and outshone every expectation out there.
This has forced different countries to start working on experimenting with their own versions of Central Bank Digital Currencies or CBDCs.
In this article, we look at some of the major countries that are experimenting with CBDCs and understand how far they are in the mainstream adoption phase.
Why Nations are frantically pursuing CBDCs in 2020?
There is no doubt that the craze in Bitcoin has jolted nations and authorities. What has struck them most is the decentralized nature and independence of the cryptocurrency.
- Individuals and investors are flocking to Bitcoin and investing heavily based on its many benefits. So, it would be right to say that the first major reason countries are pursuing CBDCs is to counter Bitcoins and other cryptocurrencies.
- The Black-Market economy, which exists in developing and developed nations cost the exchequer billions of dollars. With CBDCs, countries and their authorities would be able to trace payments, income, and taxation down to the last dollar.
- Nations want more money flowing through the economy. This is because, liquidity in the market gives a much-needed boost to the various sectors, and churns growth. CBDCs will make it easier for people to spend money.
List of Countries leading CBDC Adoption in 2021
China was perhaps one of the earliest, if not the earliest country, which started engaging with cryptocurrencies and Blockchain technology way back in 2013. Their initial head start has resulted in them being the only country in the world that has successfully launched its very own native CBDC, the Digital Yuan. China’s transport department is already issuing the Digital Yuan as tokens for travel benefits to its employees.
In addition to China, the Scandinavian nation of Sweden is also quite far ahead in terms of moving to an entirely CBDC-based model e-Krona. If reports are to be believed, Swedish authorities have already started experimenting with their CBDC in select government departments in the form of tokens. Many believe that if the pandemic would not have struck, Sweden would have led the world in CBDC adoption.
If you are following the news, you will see how Turkey is practically at loggerheads with the US and many European countries, including France. The country is building relationships with Russia and has also heavily invested in creating its own CBDC for international trading and commerce. It fears sanctions and does not want to be dependent on the global dollar for its trade and commerce requirements.
4. Eastern Caribbean Central Bank
The Caribbean islands, comprising Barbados, Jamaica, Antigua, Barbuda, and others have collectively come up with the ECCB. The CBDC issued by the ECCB is expected to boost the travel and tourism industry of the region. It will allow for simplified payment solutions and a more free-flowing economy in the entire region. The CBDC in this instance is measured against the value of the US Dollar.
Iran has become a hotbed for the world’s cryptocurrency ecosystem. Iran has been able to attract miners from different parts of the world and is now engaging with this alternative financial model on an increasing scale. The fear of sanctions and of not being able to export its natural resources, oil, means it will have to come up with a new way to trade without the American dollar.
The Final Word
In the above countries, buying, selling and trading of Bitcoins is quite popular. While the legality matters in specific cases, the population depends on credible platforms like trading software to invest in Bitcoins. CBDCs continue to grow in popularity and the year 2021 is going to be a defining one for them.