With improved transparency, traceability, security, CBDCs help central banks in creating a more efficient economy.
As cryptocurrency adoption has significantly increased among retail investors, institutionals, and numerous traditional finance players, central banks have entered into a heated race to develop their own CBDCs.
According to a Bank of International Settlements (BIS) survey from last May, 65% of the polled central banks stated that they had actively researched CBDCs. And multiple governments are well beyond the decision-making and research stages.
While the Bahamas have launched the digital sand dollar last October as the world’s first CBDC, China has emerged to be a leader in this field among major economies, conducting extensive pilots and preparing a draft law for its digital yuan project.
Sweden’s Riksbank has also been actively testing its e-krona CBDC, with its central bank recently announcing a one-year extension for the project. The Scandinavian nation’s government has already started reviewing whether to implement the digital currency expecting to complete it by November 2022.
CBDCs have become a top priority for central banks that had been previously hesitant about digital currencies. While the US published a research paper on central bank digital currencies last month, the EU announced the end of its public consultation on CBDCs in January.
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