Over the last year, the narrative surrounding central bank digital currencies (CBDCs) has advanced considerably. From an almost entirely conceptual discussion, CBDCs are now in various stages of research and development to ascertain how they could work in practice.
China’s digital yuan is currently leading the pack. Following several pilots, the Chinese government is expected to roll out its CBDC to a population of over a billion people in 2022. While no other country has yet reached the same stage of CBDC development, there has been surprisingly rapid progress. Recently, G7 finance heads met and reached a consensus over some defining principles for CBDCs. But outside China, some of the most significant results have also been emerging from Asian countries.
By 2019, it had joined forces with the Bank of Thailand to study CBDCs for cross-border payment. After the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People’s Bank of China and the Bank for International Settlements (BIS) became involved, the collaboration entered a new phase to develop a multiple CBDC bridge, dubbed mBridge.
However, the newest development is the one that could have the biggest impact on the status quo. In particular, CBDCs are an existential threat for permissionless finance that crypto has grown accustomed to.
