Summary of CBDCs Report Q3/2024

Overview

The Central Bank Digital Currencies (CBDCs) Q3/2024 report captures the progress across countries concerning CBDC, with notable advancements in terms of adoption and exploration of CBDCs across different regions and the efforts they have made toward implementing CBDCs, the motivation for the implementation and challenges faced by each region. Each region, from Asia Pacific to Europe, the Americas, the Middle East, Africa, and post-Soviet states, has its economic priorities and strategies, updated in the report. Collaboration efforts, the flow of institutional frameworks, and the potential segmentation of retail and wholesale CBDC applications will also be discussed.

Key Sections

Global CBDC Trends and Collaborations:

Over 98% of global GDP is engaged in CBDC projects — 134 countries.

The development of CBDCs is supported by the principle of cross-border collaboration, evidenced by significant international projects, including China’s implementation of m-CBDC in Guangdong and Project mBridge, spearheaded by Hong Kong and others.

Asia-Pacific Region:

China maintains the lead for digital yuan, with $986 billion in transactions and growing cross-border use cases.

In Project Acacia, Australia is focusing on wholesale CBDC applications to improve interbank settlement efficiency.

India, Indonesia, Thailand and South Korea are pursuing different paths, such as financial inclusion, tokenized assets and cross-border applications.

Europe:

Countries like Germany and Austria have reservations about privacy and control of the European Central Bank’s Digital Euro.

Others continue their experiments with “Britcoin” and Sweden’s e-Krona, which aim at programmable features and interoperability with existing financial systems.

North and South America:

DREX is Brazil’s latest advancement in wholesale CBDC efforts. It will use blockchain and AI to advance financial services.

Canada has scaled back plans for a retail CBDC in the Americas, instead turning its attention to broader payment systems—a cautious approach.

Peru’s CBDC pilot aims to bring unbanked populations into the formal economy.

Middle East and Africa:

CBDCs work, and Nigeria’s eNaira shows its potential to increase financial inclusion. However, they also have serious drawbacks (like cybersecurity and banking sector impacts).

The UAE is participating in cross-border CBDC projects, such as Project mBridge, and is positioning itself as a digital finance hub.

Israel and Azerbaijan are careful, with Israel conducting CBDC use cases in a controlled environment.

Russia and Post-Soviet States:

To mitigate sanctions, Russia is accelerating the rollout of the digital ruble and promoting alternative payment systems.

Kazakhstan wants to use the digital tenge pilot to improve fiscal transparency and foster Chinese trade. CBDC experiments in other regional initiatives also suggest the possibility of reducing the U.S. dollar's dependence on cross-border trade.

Conclusion

The report finds that CBDCs can be a positive innovation for financial inclusion and better payment efficiency. Yet, numerous challenges (such as privacy, those associated with regulatory frameworks, economic stability, etc.) must be overcome before they become accepted. The fact that we continue experimenting and gradually rolling CBDCs out shows how much these may reshape global finance.

Suggested Article Topics

1. The Role of CBDCs in Modernizing Cross-Border Payment Systems
2. Challenges and Opportunities of the Digital Euro: A Closer Look
3. How China’s Digital Yuan is Paving the Way for Global CBDC Adoption
4. The Diverging Paths of Retail vs. Wholesale CBDCs: A Comparative Analysis
5. Financial Inclusion through CBDCs: Case Studies from Africa and Latin America
6. Why the U.S. is Prioritizing Wholesale CBDCs over Retail Applications
7. Project mBridge and the Future of Cross-Border CBDC Collaboration
8. The Role of CBDCs in Reducing Dependency on the U.S. Dollar for International Trade
9. Understanding Privacy Concerns in CBDC Development: Lessons from the European Union
10. Asia-Pacific Leads in CBDC Innovation: A Regional Analysis of China, Australia, and Beyond