- The term ‘CBDC’ was largely unknown before 2020, but that is no longer the case
- Governments across the world have been investigating the concept this year, with some even implementing them
- Facebook’s Libra token and the coronavirus have propelled CBDCs into conversation
Central Bank Digital Currencies (CBDCs) have gone from being a futuristic potential currency system to being a tangible payment method already in use in a handful of countries in 2020 alone. The stunning pace of CBDC development, which really began in June 2019 when Facebook revealed its Libra project to the world, has been exacerbated by the coronavirus. The resistance to supplementing or replacing fiat currencies with a digital version had been put off for a variety of reasons by governments worldwide, but this year has seen to it that they can no longer put their heads in the sand over the matter, resulting in an explosion of research, testing, and implementation.
China Leads the Way
China has of course taken the lead on CBDC development, seeing quite rightly a chance to undermine the dominance of the U.S. dollar which has been in place since the end of World War II. China first mooted the possibility of a CBDC in 2016, since when it has put a huge amount of resources into the concept, resulting in real world tests in Beijing and Shenzhen this year.
In response, Japan and South Korea have this year announced a ramping up of development of their own CBDCs, while some European nations have also taken the hint – France has eight CBDC candidates tendering for the role of CBDC operator, while Switzerland is close to testing its own CBDC.
Europe Working to Bridge Gap
The European Central Bank in October published a survey in order to garner feedback on a digital euro, while Russia published a report on their own potential CBDC the same month. Smaller nations like the Bahamas and Lithuania launched a fully working product this year, underlining how 2020 has been the year that CBDC research really took hold.
Interestingly, two countries still lagging behind in CBDC development are the UK and the USA. The Bank of England published a paper in March this year which was noncommittal on the subject, while talk in February of a potential digital dollar has stalled over fears that it would not reach enough people.
2021 Could be See Multiple CBDC Launches
2020 was without doubt the year that CBDCs were thrust into the spotlight, and there is every chance that 2021 will see concepts move to testing phases and beyond. How many more countries will have issued CBDCs this time next year obviously remains to be seen, but the answer could be more than anyone could have anticipated.