The Central Bank of Nigeria’s eNaira and the Bahamian Sand Dollar topped the world’s central bank retail project indices in PricewaterhouseCoopers’ 2022 edition. Central Bank Digital Currency (CBDC) Global Index.
Titled “The Race for Digital Money is On,” the PwC Index analyzes and ranks leading retail and wholesale CBDC projects. The index also assesses the current stage of development of the CBDC project taking into account the opinion of the central bank and the public interest.
PwC, in its latest index report, said that more than 80% of central banks are considering launching a central bank digital currency (CBDC) or may have already done so.
“The index retail projects are led by the Central Bank of Nigeria (CBN) eNaira, the first CBDC in Africa, and the Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, making the Bahamas the first country to launch a CBDC,” reads the report released on Tuesday.
Overall, the report indicates that retail CBDC projects (digital currencies designed for public use) have reached higher levels of maturity than wholesale projects (digital currencies used by financial institutions that have accounts with central banks), and that the past year has seen progress on several successful wholesale pilots.
The report said China became the first major economy to pilot a CBDC in 2020 with the digital yuan, and as of March 2022, pilot programs are underway in 12 cities, including Beijing and Shanghai.
On the wholesale side, the main project of the index is the combined effort of the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) to launch the mBridge project, according to the report of PwC.
He said the mBridge project focuses on developing a proof-of-concept prototype to enable real-time cross-border foreign currency payments on distributed ledger technology.
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Similarly, the work of the Monetary Authority of Singapore (MAS), with two new CBDC projects, ranks high in the index and continues the development of a wholesale CBDC for cross-currency payments.
Haydn Jones, UK blockchain and crypto specialist at PwC, said: “This year’s index shows that central banks are stepping up their activities in the area of digital currency. Countries are at different levels of maturity with CBDCs and each country has different motivating factors.
He said growing financial inclusion, facilitating cross-border payments and controlling financial crime are all factors that come into play.
“We expect research, testing and implementation of CBDCs to intensify in 2022,” Jones added.
He said the success of eNaira in Nigeria is likely to spur the development of CBDCs in countries where financial inclusion is one of the key desired outcomes.
In his remarks, John Garvey, Head of Global Financial Services at PwC in the US, said: “It is especially important for financial institutions to understand where central banks are at with digital currencies because ultimately, CBDCs will begin flowing through the payment system and begin to reach the bank balance. sheets.”
He said careful consultation with central banks is key to clarifying the business case for CBDCs, from the perspective of inclusiveness, financial performance and interoperability.
“One thing is clear, reducing the cost of payments in an economy brings value to the whole economy and to citizens. If CBDCs can ultimately enable more efficient payments, it will benefit everyone,” Garvey added.
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