Governments Forge Ahead in Development of CBDCs

• The clamor for the development of CBDCs by Central Banks is growing.
• The distrust is pushing more crypto-centric users toward privacy coins like Monero, ZCash and Dash.

Many governments including the United States are still working on developing their Central Bank Digital Currency (CBDC) despite the challenges that the solution currently faces. In March 2022, President Joe Biden’s administration released an Executive Order necessitating government agencies to open research into a potential U.S. CBDC “in a manner that protects Americans’ interests.”

As noted earlier, it is worth noting that the U.S. is not the only region moving in this direction.

According to data from CBDCTracker, the Bahamas, Jamaica and Nigeria have successfully launched their respective retail CBDC. Another five nations are still in their pilot stage while twenty others are in their proof of concept phase.

There are a group of countries that are looking into wholesale CBDCs intended for commercial and central bank use. A survey which was conducted and published by the Bank for International Settlements (BIS) confirms that about 93% of global central banks are working on developing their CBDC.

The survey involved 86 central banks answering questions regarding their retail and wholesale CBDC efforts, types, goals, and advancement levels. Also, the survey sought the opinions of the respondents on the use of stablecoins and other digital assets in their jurisdiction. As it stands, it looks like about 24 central banks will release their national digital currencies by 2030. This would encompass 15 retail and nine wholesale CBDCs, based on the survey result.

These 86 central banks “represent 82% of the world’s population and 94% of global economic output.” Of this figure 58% represents emerging market and developing economies (EMDE) and 28% from advanced economies (AE).

CBDCs Risks Turns Millions to Monero, DASH, and ZCash

Looking at the clamour around this form of legal tender by Central Bankers, one would assume that it is an exciting development without its challenges.

The BIS refers to CBDCs as “a new tool in the financial inclusion toolkit.” Also, an op-ed co-authored by BIS General Manager Agustín Carstens and Queen Máxima of the Netherlands has the title as “CBDCs for the people.”

The International Monetary Fund (IMF) sees CBDC as a tool that can “bank large unbanked populations”, especially in developing countries.

However, its implementation has not been without some obstacles. When Nigeria launched its e-Naira, the adoption rate was disappointing even after a year. At a time, the marketing team of the CBDC took to the streets to sensitize citizens and push the adoption rate. In America, the situation is not any different as only 16% of Americans support the idea while more than double this figure oppose the implementation of a CBDC.

Many crypto proponents are concerned that CBDCs will take away financial freedom from users. Consequently, these crypto enthusiasts are turning towards privacy-centric coins like Monero (XMR), DASH, and ZCash. These kinds of tokens are believed to offer enhanced anonymity and trustless security features.

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