Original title: overview of CBDC in the world's major economies
By Chenglin PUA (Malaysia) | Editorial review | Yu Baicheng Typesetting | Wang Jilong Yan
Since the second half of the year, the central banks of Venezuela, India and other countries have made significant progress in digital currency (CBDC).
Recently, the bank for International Settlements (BIS), the International Monetary Fund (IMF) and the World Bank jointly called on the global central banks to cooperate on CBDC. BIS said it would spare no effort to promote the development of CBDC, so as to realize financial modernization and ensure that "technology giants" will not control currency. Benoit coeure of the bank for International Settlements warned,Without CBDC, digital currency will be increasingly dominated by large technology companies because they can rely on a large social media user base to achieve this goal.BIS's report "central bank digital currency and cross-border payment" said that at present, only a few central banks have made decisions on Issuing CBDC.
This paper mainly combs the progress of countries that have implemented CBDC, the pilot situation of important economies, the future implementation plan and their views on CBDC.
Countries that have officially issued CBDC, source: Atlantic Council
Countries that have piloted or are developing CBDC, source: Atlantic Council
Countries studying CBDC, source: Atlantic Council
Progress statistics of countries in CBDC, source: Atlantic Council
According to the statistics of the Atlantic Council, five countries (Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia and Grenada) have officially launched the central bank CBDC, among which the San dollar launched by the Bahamas is the first widely used CBDC.
On October 20, 2020, the Bahamas became the first country in the world to officially launch CBDC, which is called project sand dollar. A total of 393000 residents in the Bahamas have started using the San dollar (one San dollar corresponds to one Bahamas dollar). Sand dollar aims to promote greater financial inclusion in more than 700 islands in the Bahamas. Chaozhen Chen, deputy manager of the Central Bank of the Bahamas,Sand dollar will help residents who do not have access to banking services and do not have bank accounts to access digital payment infrastructure or banking infrastructure.
The Central Bank of the Bahamas said that the current sand dollar is limited to domestic use and cannot be used for overseas payment. During their stay in the Bahamas, non local residents can hold and trade sand dollars by registering the sand dollar wallet. The maximum holding limit is 500 sand dollars and the monthly trading limit is 1500 sand dollars. The Central Bank of the Bahamas also allows the sand dollar account to be bound with traditional bank accounts, so that cross-border payments can be made through traditional channels.
CBDC of various countries is mature, source: PwC CBDC global index
According to the PWC CBDC global index, a new report by PwC, the Bahamas' sand dollar is in a leading position in the field of CBDC. PwC uses data from global central bank websites, news websites, Atlantic Council and Google Trends to track the global mainstream response to CBDC. The report shows that sand dollar in the Bahamas is making world-leading progress.
Henri Arslanian, partner of PricewaterhouseCoopers and head of global cryptocurrency, said: "all residents of the Bahamas can access digital wallets through mobile applications or physical payment cards. Records can be collected in daily operations, such as income and expenditure information. In addition, applications for microfinance can also be supported. " The report evaluates that sand dollar has a set of clear objectives: to improve payment speed, efficiency and security; Reduce the cost of financial services and build inclusiveness across age and status; And strengthen the supervision of money laundering, forgery and other financial fraud. It can be seen that in addition to leading the world in launching CBDC, the Bahamas also leads the world in the application maturity of CBDC.
In April 2021, the Eastern Caribbean Central Bank (ECCB) launched its central CBDC project dcash. Founded in October 1983, ECCB is the financial authority of Anguilla, Antigua and Barbuda, the Dominican Federation, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines.Dcash will cover only four of these countries: Antigua and Barbuda, Grenada, Saint Kitts and Nevis and Saint Lucia.The public is now free to use the application in the above countries“ The future of money is digital, so let's make history together, "said Timothy n. J. Antoine, President of the Eastern Caribbean Central Bank.
ECCB states that users can purchase dcash from approved suppliers using notes and coins or by exchanging funds from their bank accounts. Antoine said that ECCB had successfully realized its first cross-border transaction. In addition, he also said in his blog: "the world is setting off a payment revolution." ECCB's goal is to reduce cash use by 50% by 2025. ECCB said that as more and more central banks pilot their CBDC, the utility of dcash may be extended beyond ECCB.
Cambodia officially launched the CBDC "Bakong" pilot plan supported by the Central Bank of Cambodia on June 23, 2021. Bakong supports the transaction between us dollar and lire (Cambodian currency), which can help Cambodians make payments using smart phones and transfer funds between individuals. At a press conference in Phnom Penh, the capital, CheA serey, governor of the Central Bank of Cambodia, said,It is hoped that the Bakong system will help promote electronic payment between people without involving cash, thereby contributing to social welfare and preventing COVID-19 from spreading.The Central Bank of Cambodia started the trial operation of the project in July. So far, about 20 financial institutions have participated in the project, and dozens of financial institutions are expected to join.
The Indian government is also very keen on developing digital rupees. On August 2, the Reserve Bank of India announced that it would implement the digital rupee project. T Rabi Sankar, vice president of the Reserve Bank of India, said in an interview that the Reserve Bank of India is trying to introduce the digital rupee in stages, and the specific details were not disclosed. At present, the Reserve Bank of India is evaluating the application scope, basic technology and verification mechanism of CBDC. Sankar said that CBDC will become part of the "arsenal" of most central banks in the world, and many central banks in the world are working in this direction. He also saidThe world needs CBDC to protect consumers from the "terrible fluctuation level" of some virtual currencies without sovereign support.
The Central Bank of Venezuela announced on August 6, 2021 that it would launch CBDC in October. Venezuelan President Nicolas Maduro first announced the idea of CBDC as early as February - he will issue CBDC as one of the important actions taken by the government to realize economic modernization and reconstruction. Maduro is no stranger to the CBDC issued by the state. He launched petro currency linked to oil in 2018 as a tool to avoid U.S. sanctions. However, the official petro coin white paper does not mention some theoretical basis (such as how to transfer and store funds, and how to ensure fund security). In addition, the development system of petro coin has not been announced. Venezuela has developed the biopago platform to support the circulation and use of petro coins. However, in practical application, many businesses complain about errors and payment failures in the market of the platform. In addition, many citizens complain that they are forced to queue up for up to six hours at stores that accept petro coins to spend money. All these reasons eventually led to the end of the petro currency developed by Venezuela.
Singapore's Ubin and Canada's Jasper projects are at the forefront of developed countries. Now, both projects have entered the testing stage.
Ubin is a CBDC jointly researched and developed by the monetary authority of Singapore (MAS), the Banking Association of Singapore and a number of international financial institutions. It aims to study the application of distributed ledger technology in clearing and settlement transaction scenarios. Since the first internal test in November 2016, Ubin has conducted a total of 6 stages of testing.
The first stage mainly explores the use of CBDC for inter-bank payment. The second stage is to explore the inter-bank transfer using DLT (distributed ledger Technology), and investigate the functions of specific real-time total settlement system (RTGS), such as queue processing and payment deadlock solutions. In the third stage, MAS and SGX cooperated to realize domestic payment, delivery and settlement on two independent blockchain platforms to deal with tokenized assets. The objective of the fourth stage is to evaluate the feasibility of cross-border payment and delivery. The fifth stage is to assess the impact of the distributed ledger on the existing regulatory framework and market processes. The objective of phase 6 is to use previous experience to perform cross-border settlement of payments and securities. At present, Singapore Ubin project is in the fifth stage.
Jasper of Canada is also at the forefront of developed countries. Jasper project aims to explore the feasibility of using DLT for large amount payment, clearing and settlement. The project is divided into two phases: the first phase of Jasper project realizes the simulation of fund transfer in order to further explore the operation of distributed ledger technology; In the second stage, the Bank of Canada issued the same amount of digital assets on the distributed ledger, namely CAD coin (issued in April 2017), and sent CAD coin equivalent to mortgaged cash to participating banks. Participating banks can use CAD coin for real-time payment and settlement on this platform, or pay CAD coin like the Bank of Canada in exchange for Canadian dollars.
As for the Bank of Japan, it announced at the end of 2020 that it would launch CBDC by 2023, a CBDC supported by large private enterprises and banking giants. However, before its official launch, the Bank of Japan will test whether it has the basic function of money and can be widely used by private enterprises and consumers.
The research and development of CBDC by the financial regulatory authorities of European countries is still in the stage of demonstration and small-scale experiment. In 2020, the European Central Bank announced that it would focus on the study of digital euro, successively set up a senior working team to study CBDC, developed a CBDC payment system to protect users' privacy, and released the "European chain" based on R3. Although the team has been established, its progress is still slow.
The United States was not interested in CBDC earlier, but in 2020, the Federal Reserve released some research results of the foowire pilot project to evaluate the application potential of distributed ledger technology in the payment field. The outside world regards this as an important signal that the Federal Reserve is quietly laying out CBDC R & D.
On May 20, 2021, Federal Reserve Chairman Jerome Powell mentioned in a video speech that the Federal Reserve would release a research paper on us CBDC this summer, and said that "this paper will represent the beginning of a thoughtful process". Powell said,It is hoped that the Federal Reserve will play a leading role in formulating international standards for CBDC,CBDC will be a complement to, not a substitute for, cash and digital dollars. In addition, he criticized the sharp fluctuations in the value of cryptocurrencies such as bitcoin, which is not a convenient way of payment, and relatively supports stable currencies linked to legal currency.
However, Randal Quarles, vice chairman of financial supervision of the Federal Reserve, expressed his cautious attitude towards CBDC on June 28. He said, "I think the United States must set a high threshold for issuing CBDC". He pointed out that in addition to being a possible target of network attacks, CBDC also has a huge cost burden. In addition, Quarles also said, "I don't think foreign currency or CBDC will threaten the status of the US dollar as a global reserve currency or its role in international financial transactions." He also pointed out that the difficulty of issuing CBDC in the United States still lies in attracting the wind“ The Fed's CBDC may become an attractive target for cyber attacks. Eventually, the Fed itself may become a retail bank for the public like a commercial bank. "
Quarles is a cautious CBDC in the Federal Reserve. He believes that even if the central banks of other countries are issuing CBDC, it does not mean that the Federal Reserve should also issue CBDC. He also has a negative attitude towards the cryptocurrency represented by bitcoin. He believes that at present, everyone's interest in bitcoin mainly lies in the novelty and anonymity of bitcoin. "Once the law enforcement agencies force to break this anonymity, gold is still strong, then everyone's interest will disappear. It is almost certain that cryptocurrency will only be a risky speculative investment tool, not a revolution in the way of payment. "
It can be seen that although the Fed has plans to implement CBDC, there are still two voices inside. One is to support the issuance of CBDC, hoping to keep up with or even lead the times; The voice of the other side is that the Fed does not need to follow the footsteps of the times to issue CBDC. Whether the Fed will really issue CBDC needs to observe the Fed's statements and actions in the future.
China Digital RMB
Digital RMB is a CBDC issued by the people's Bank of China, which is operated by designated operating institutions and exchanged to the public. Digital RMB exists in electronic form and its value is equal to that of RMB banknotes and coins.At present, digital RMB is in the pilot test stage in 11 provinces and cities, with more than 1.32 million pilot scenarios, covering wholesale and retail, catering, culture and tourism, education and medical treatment, public transportation, government payment, tax collection, subsidy payment and other fields.
China's idea of implementing the digital RMB dates back to 2014. At that time, under the leadership of Zhou Xiaochuan, the people's Bank of China established the digital currency Research Institute of the people's Bank of China and a special CBDC research team to start special research on issues such as CBDC issuance framework, key technologies, issuance and circulation environment and relevant international experience. At the end of 2017, with the approval of the State Council, the people's Bank of China organized some large commercial banks and relevant institutions to jointly carry out the research and development of the digital RMB system (DC / EP).
On August 14, 2020, the Ministry of Commerce of the people's Republic of China issued the overall plan for comprehensively deepening the pilot of innovative development of service trade, which proposed to carry out the digital RMB pilot in Beijing Tianjin Hebei, the Yangtze River Delta, the Great Bay area of Guangdong, Hong Kong and Macao and the pilot areas qualified in the central and western regions. First, Shenzhen, Chengdu, Suzhou, xiong'an new area and other places and relevant departments of the future Winter Olympic scene will assist in the promotion, and then expand to other regions as appropriate.
The figure of digital RMB also began to appear in daily life. For example, on January 5, 2021, Shanghai Tongren Hospital piloted the use of digital RMB and opened people's medical treatment to digital RMB payment. On February 24, 2021, Chengdu launched the activity of "welcoming the new year with digital RMB red envelopes", which distributed a total of 40 million yuan of digital RMB consumption red envelopes to individuals. The number of red envelopes is about 200000. After receiving the red envelopes, people can consume in the pilot places. On June 29, Suzhou rail transit line 5 was opened. Citizens can buy tickets in digital RMB. From June 30, Beijing Rail Transit launched the digital RMB payment channel of the whole road network.
In addition, more and more small and medium-sized banks such as urban commercial banks and rural commercial banks have accelerated their entry into the digital RMB application pilot. On August 13, Chengyin Clearing Service Co., Ltd. and ABC capital clearing center announced that they would access the digital RMB system at the same time. According to the disclosure of Chengyin clearing, as of August 12, 2021, 24 urban commercial banks have been confirmed to access the digital RMB interconnection platform through urban bank clearing.Another 94 banks intend to access the digital RMB interconnection platform through urban bank clearing. It can be predicted that as more and more small and medium-sized banks join the digital RMB system, it will greatly expand the practical application coverage of digital RMB and accelerate the pilot process of digital RMB.
The bank for International Settlements released its report ready, steady, go? – in January 2021 Results of the third BIS survey on central bank digital currency》。 The report shows that the research and development progress of CBDC in emerging market countries is significantly faster than that in developed countries. At present, the Bahamas, Uruguay, Ecuador, Venezuela, Thailand, Cambodia and other countries have piloted or issued CBDC, and many emerging market countries are actively carrying out the application test of retail CBDC. In contrast, the research and development of CBDC in Europe, the United States and other countries is still in the research and experimental stage, and only the research and development of CBDC in Singapore Ubin, Canada Jasper and Japan is slightly faster.
BIS definition of emerging and developed economies, source: BIS report ready, steady, go? – Results of the third BIS survey on central bank digital currency》
The report mentioned that the reason why the pace of research and development of CBDC in emerging market countries is faster than that in developed countries is mainly due to many emerging market countriesThere is an urgent need to launch the central bank CBDC to effectively solve the problems of limited liquidity of domestic paper money, alleviate the abnormal large fluctuation of domestic currency exchange rate, and improve the tracking ability of currency investment.
In addition, the monetary decision-making path of European and American countries is long and the decision-making power is relatively scattered. For example, the financial regulatory authorities of European and American countries are still discussing the possible financial disintermediation caused by CBDC (meaning that the capital supply bypasses the media systems such as commercial banks and is directly transmitted to the demanders and financiers, resulting in the extracorporeal circulation of funds), run risk and other issues, It also leads to a longer time for them to reach a consensus on CBDC research and mechanism design.