National Cryptocurrencies (CBDC)

Schemes for issuing digital currency by central banks

Most global payments are already digital, but the central bank's digital currency will provide risk-free, central bank-backed money denominated in the national settlement unit - as will cash, albeit updated to meet the requirements of the digital financial system.

The motivations for issuing CBDCs vary by country and region, according to research by Bloomberg Economics, a policy approach and technical schemes will also differ.

Available emission options for March 2021

National cryptocurrencies

Digital ruble

Main article: Digital ruble

Digital Belarusian ruble

Main article: Digital Belarusian ruble

Digital hryvnia (e-hryvnia)

Main article: Digital hryvnia (e-hryvnia)

Digital tenge

Main article: Digital tenge

Digital yuan

Main article: Digital Yuan (DCEP)

Digital euro

Main article: Digital Euro

Digital stench

Main article: South Korea's Digital Howl

Digital yen

Main article: Digital Yen

Digital shekel

Main article: Digital shekel

Digital Naira (Nigeria)

Main article: Digital Naira

Sango Coin (CAR)

Main article: Sango Coin (cryptocurrency)

Digital baht

Main article: Digital baht of Thailand

Digital Caribbean dollar

Main article: DCash (digital Caribbean dollar)

Digital Bahamian dollar (Sand Dollar)

Main article: Sand Dollar

Digital pound sterling

Main article: Digital pound sterling

Digital dollar

Main article: The Digital Dollar

Digital rupee

Main Article: Digital Rupee (CBDC-R)

Digital real

Main article: Digital Real (DREX)

Digital rial

Main article: Digital Rial

International Digital Currency Translation Services

• mBridge - Digital Yuan Translation Service

As of August 2023

2024: How national digital currencies will help oil exporting countries. IMF report

Central bank digital currencies (CBDCs) can increase financial integration and efficiency of cross-border payments, providing a number of important benefits for petroleum exporting countries. This is stated in the report of the International Monetary Fund (IMF), submitted on June 18, 2024.

It is noted that cross-border payments can be associated with problems such as differences in data formats and rules of work in different regions. In addition, comprehensive compliance checks should be performed. CBDCs will potentially eliminate these complexities, and therefore reduce transaction costs.

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Bloomberg

Central bank digital currencies can promote greater access to financial services, promoting competition in the payment market. In particular, a significant amount of transactions can be carried out directly and/or with fewer intermediaries, which in turn will provide an opportunity to reduce the cost of financial services and make them more accessible. The introduction of CBDC can also drive the modernization of technology platforms and improve the efficiency of payment services in general. Unlike for-profit organizations, central banks can help keep the cost of services low because they have no interest in making a profit. Countries in the Caucasus and Central Asia, oil importers in the Middle East and North Africa, and low-income countries are particularly interested in these potential benefits.

As of mid-2024, nearly two-thirds of Middle East and Central Asian states are exploring implementing CBDCs, according to the IMF. However, there are certain difficulties. Thus, CBDCs can compete with bank deposits, which can affect bank profits and lending, as well as have consequences for financial stability. The IMF emphasizes that the most important factors for risk mitigation are "a healthy banking system, a robust legal system and strong oversight and regulatory capacity."^[1]

2023

130 States' Attempts to Create Their Cryptocurrencies Fail

As of the beginning of September 2024, more than 100 countries around the world are working on the introduction of digital currencies of central banks (CBDC). However, these initiatives fail, since this type of digital money, the issuer of which is the state, is not popular with citizens.

The Bank of Russia report says that in 2023, work on the CBDC was carried out by about 130 countries, which account for about 98% of world GDP. In general, the number of states implementing such initiatives has almost quadrupled over the period from 2020 to 2023. At the same time, a number of countries that previously took a more restrained position in relation to national digital currencies are inclined to launch such projects. Thus, representatives of the Bank of England in 2023 began to talk more definitely about the likely implementation of the digital pound and presented the results of the work on the choice of technical architecture. The European Central Bank also posted a number of materials indicating active work on the digital euro.

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Unsplash

The central banks of many countries analyze the capabilities of the CBDC or carry out pilot projects. However, according to RIA Novosti, there are a number of difficulties that prevent the spread of such money. This, in particular, is weak advertising and the lack of clear understanding among citizens and banks why such assets are needed. In addition, potential CBDC users are frightened by the loss of anonymity of payments, since each digital coin has a unique code that can be tracked.

Among the key advantages of the CBDC are the conduct of operations through various banks and applications according to the same rules around the clock 365 days a year, increasing the availability of payment services and the safety of funds, simplifying cost control, as well as promoting competition and innovation.^[2]

CBR: "Integration of national digital currencies can really replace SWIFT"

The Bank of Russia intends to test the digital ruble on real customers in 2023, which will bring closer the emergence of a replacement for SWIFT, the international interbank system for transferring information and making payments. This was announced on July 6, 2023 by the first deputy chairman of the Central Bank Olga Skorobogatova.

According to her, "the integration of national digital currencies can really replace SWIFT." The fact is that payments and information on such currencies will be carried out in a completely different settlement infrastructure. All organizational and technological issues can be resolved when political consensus is reached. The protocols of different countries may be different, but this problem is solved by developing agreements.

Central Bank intends to test the digital ruble on real customers in 2023

We have several working groups with countries that are ready to discuss with us the possibility of interaction at the level of national digital currencies. We do not disclose specific names. If we talk in general, then cross-border interaction is possible according to two scenarios: the integration of two platforms - a digital ruble and another digital currency, or the interaction of platforms of national digital currencies through a common system, - added Skorobogatova.

The first deputy chairman of the Central Bank also noted that the third form of the national currency (in addition to cash and non-cash) will not depend on the conditions of banks. Citizens will be able to freely pay and transfer digital rubles within the balance of funds in a digital wallet. Operations for individuals will be free, and for business - with a minimum commission. The client will be able to open a wallet in digital rubles through the mobile application of any bank and initiate transfers there. The Central Bank, receiving such requests, will conduct operations on its platform.^[3]

Zimbabwe Issues Gold-Backed Digital Tokens

On May 8, 2023, the Zimbabwean authorities announced the release of a national digital currency backed by gold. It can be used both as a payment instrument and as a means of saving. Read more here.

IMF set about creating a global platform for national digital currencies

On June 19, 2023, the International Monetary Fund (IMF) announced the beginning of the formation of infrastructure for international transactions carried out in the digital currencies of central banks (CBDC).

We are talking about creating a global platform for cross-border and domestic payments. It is assumed that the emergence of a single CBDC infrastructure will help improve efficiency and security when performing appropriate operations. In addition, according to the IMF, this will help expand citizens' access to financial services and reduce the cost of remittances.

IMF set about creating a global platform for national digital currencies

Central bank digital currencies should not be fragmented national proposals. For more efficient and fair transactions, we need systems that connect countries, we need interoperability. For this reason, at the IMF, we are working on the concept of the global CBDC platform, "said IMF Managing Director Kristalina Georgieva.

The essence of the initiative is for central banks to agree on a common regulatory framework for digital currencies that will ensure global interoperability. As Georgieva noted, the inability to agree on a common platform creates a vacuum that is likely to be filled with cryptocurrencies (usually decentralized, while CBDCs are controlled by central banks of countries).

Georgieva noted that 114 central banks of states around the world are at one stage or another of the CBDC study, and "about 10 of them have already crossed the finish line." According to her, the digital currencies of central banks should be backed by assets.

If countries develop CDBCs only for internal deployment, they underutilize their potential, concluded Georgieva.[4]

Start of SWIFT system for CBDC exchange between central banks

The banking payment system SWIFT in March 2023 began working on the CBDC digital currency exchange system between Central Banks. The system should make cross-border payments faster, cheaper, and help avoid possible fragmentation. global economy

2022

Dominica released the world's first national token

On November 29, 2022, it became known that Dominica became the first country in the world to issue a national token - Dominica Coin (DMC). The project involves the cryptocurrency exchange Huobi, the decentralized entertainment content platform TRON and DMC Labs. Read more here.

Central Bank of Sweden, Norway and Israel launched payments in digital currency

At the end of September 2022, Central, and banks Sweden Norway Israel launched a project for digital transfers of funds between countries. The system was named. Project Icebreaker We are talking about the use of central digital currencies (banks CBDC) in international retail payments and money transfers. The pilot project is being implemented with the participation of the Bank for International Settlements (BIS). More. here

2021

UAE Central Bank begins development of CBDC

In July 2021, the UAE Central Bank announced the development of its own national digital currency (CBDC).

The creation of its own digital currency is included in the regulator's development strategy for 2023-2026. The main goal of the new strategy of the UAE Central Bank is to enter the top ten leading central banks in the world.

The UAE Central Bank previously collaborated with the Saudi authorities to create a prototype of a national digital currency using blockchain technology called Aber to reduce the cost of cross-border transfers.

Map of the development of national cryptocurrencies in the countries of the world

As of March 2021

2020

Estonian Central Bank launches project to create national cryptocurrency

In early October 2020, the Bank of Estonia, in cooperation with technology companies Guardtime and SW7 Group, launched a multi-year project to create a national cryptocurrency. The work began with a study of the technological system used by the country's government. Read more here.

Mastercard Content Exchange announcement - platforms for testing national cryptocurrencies

In mid-September 2020, Mastercard introduced a blockchain platform for testing national digital currencies (CBDC). The Mastercard Content Exchange Virtual Test Environment will evaluate central bank CBDC use cases and will allow simulating CDBC output, distribution and exchange between banks, financial service providers and consumers. Read more here.

6 central banks have created a working group to issue cryptocurrency

In mid-January 2020, six central banks formed a working group with the Bank for International Settlements (BIS) to exchange information on the release of cryptocurrency.

The group will include central, banks Sweden,, and Canada Switzerland, Great Britain Japan as well as BMR European Central Bank (ECB). Each institution will continue to evaluate the "economic, functional and technical options for issuing digital currency by the central bank" and share its conclusions with the rest.

Six central banks form working group with Bank for International Settlements (BIS) to exchange information on cryptocurrency issue

Members will also work closely with the Payments and Market Infrastructure Committee (CPMI), an international developer of standards for payments and clearing, and the Financial Stability Council (FSB), the body making recommendations for the global financial system, which has previously warned of the potential risks of using cryptocurrencies tied to conventional physical media.

The task force will be led by the newly appointed head of the BMW Innovation Centre, Benoit Curet (Benoît Cœuré) and Jon Cunliffe, Vice-Governor of the Bank of England and Chairman of CPMI. The working group will also include representatives of the management of other banks.

Although Christine Lagarde, a former head, International Monetary Fund first called on central banks to seriously study digital currencies at the end of 2018, interest in them did not really rise until after the announcement Facebook of the release of cryptocurrency Libra in the summer of 2019. The prospect of such a digital currency in the private sector has accelerated the central bank's research and development on cryptocurrencies.

By the way, the new working group is not the first time that central bankers have worked together on blockchain technology. Since 2016, the ECB and the Bank of Japan have been working together to issue research reports on DLT integration into global financial infrastructure.^[5]

2019: Which countries are developing their cryptocurrencies

At the end of December 2019, The Block published a study that talks about which countries are developing their own cryptocurrencies.

At the time of the report, 18 central banks announced the creation of the so-called sovereign digital currencies (Central Bank Digital Currencies, CBDC). In four countries - Senegal, Venezuela, Uruguay and Tunisia - the corresponding projects have already been implemented. In total, experts studied more than 60 states.

The Block has published a study that talks about which countries are developing their own cryptocurrencies

In late December 2019, the Central Bank of the Bahamas (CBOB) announced that it was working to develop a digital version of the Bahamas dollar. The new currency in pilot mode was launched in the Exuma area, and in the first half of 2020 the program is planned to be expanded. The Central Bank is confident that the digital form of funds will help in the fight against money laundering, terrorist financing and other illegal abuses in the financial system.

On December 25, 2019, the Chairman of the Central Bank of the Russian Federation Nabiullina said that the Bank of Russia began testing stablecoins in the "regulatory sandbox." According to her, the possibility of issuing a digital ruble is being studied in order to identify what advantages this will give for citizens and businesses.

Nabiullina believes that the release of such a digital ruble can have serious consequences in the form of a change in the structure of the financial market.

If, for example, individuals are allowed to keep money in accounts with the Central Bank, then this can significantly change the passive base of commercial banks. In the conditions of some not very calm times, the flight of deposits and the flow of funds may begin, "she said, adding that the issue of digital currency should be approached very carefully, studying the negative and positive experience of other countries.

Earlier, the Central Bank of the Russian Federation stated that the regulator is studying, among other things, the experience of China and Sweden in the field of digital currencies.^[6]

2017: Estonia prepares to launch national cryptocurrency - estkoin

The Estonian authorities in 2017 are preparing to launch the world's first national cryptocurrency - estkoin. Thus, they expect to directly attract investors from all over the world to the country's economy. The national cryptocurrency will be created as part of the digital citizenship program and plan to launch it through the state ICO, and transfer the proceeds to a public-private partnership that will promote the "digital nation."

They are also considering the option of creating a venture capital fund to support "electronic entrepreneurs." Foreign investors receive an official digital ID, which will make it possible to register a company in an EU country in a simplified form. Thanks to him, entrepreneurs will be able to open a bank account and get an electronic signature. To date, 22 thousand entrepreneurs have registered in the system.

Estkoins will be able to pay for public and private services in Estonia. The authorities hope that as a result , estkoin will function as a viable currency used around the world.

2016: World's central banks probe benefits of digital cash output

In a few years, using blockchain technologies, central banks of different countries will begin to abandon the release of cash and replace it with a "digital cash." This forecast was given by representatives of companies and banks involved in the development of blockchain systems at the Russia Risk Conference in October 2016.

We are talking about electronic money that the state itself will issue (fiat money), and thereby save on printing, storing, protecting and transporting paper cash. The Bank of England conducted a study, finding out that the benefit from the transition to digital cache will be 3% of GDP per year, says Sergey Ivliev, executive director of Lykke, head of Russia's first laboratory of crypto-economics and blockchain systems at PGNIU.

It's inevitable. There will be a gradual replacement of the traditional cache with digital cash. All the largest, most advanced central banks in the world are already working on digital cash, says Sergey Ivliev.

On the digital dollar CADcoin based on blockchain technology is already working in Canada, at the concept level there is an RSCoin in the Bank of England. In early 2016, it became known that the People's Bank of China is trying to create its own digital currency.^[7]

In the event of a transition to digital cash, the country's central bank will, in fact, work directly with users.

"Bypassing private banks, people will be able to keep money in the form of" coins "in the central bank, which is more reliable than a commercial bank," said Sergei Ivliev.

Cash is a very good way to launder money, an uncontrolled flow of finance. If we switch to the blockchain, where all the moves are recorded, and there will be a blockchain created by the central bank, it will be very difficult to perform illegal operations, everything will be optimized and transparent, - said the executive director of Lykke the advantages of such a system.

Citing the opinion of the European Central Bank, he predicts that public digital money could appear in five years.

Director of Cryptotechnologies of QiwiAlexey Arkhipov believes that the replacement of paper money with electronic money can occur in some countries in 10 or more years. According to him, now the blockchain technology is immature for this, and by that time it will change significantly.

Alexey Blagirev, director of innovation at Otkritie Bank, believes that this could happen much earlier, given how quickly banks began to develop blockchain technology.

Notes