Central banks around the world are now taking an interest in digital currencies, according to a new study from a US think tank.
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Central banks in 134 countries are currently interested in digital currenciesaccording to a recent study.
According to data from the US-based think tank Atlantic Council, 66 of these countries are in a “advanced phase of exploration”corresponding to a development phase of a digital currency or a pilot phase.
A central bank digital currency (CBDC) is a digital form of a country’s fiat currency distributed by that country’s national bank, according to a definition from the Atlantic Council.
Instead of printing money, central banks would issue coins or electronic accounts “backed by the full faith and credit of the government,” the report said.
This cash stands out from the others online currencieslike cryptocurrencies, since it is guaranteed by the national bank.
Interest in digital currencies has more than tripled since May 2020, when only 35 countries were exploring them, the study found.
Three countries have launched a digital currency: BahamasJamaica and Nigeria. All three are working to extend the reach of these currencies within their borders.
What are the implications of a digital currency within the EU?
The European Central Bank (ECB) has launched the digital euro project in July 2021, in order to create a currency accessible to all in the eurozone.
The digital euro would come in “species complement”, by offering customers a free and universally accepted option to pay for their purchases of goods and services. It is an alternative way to pay in euros, which could be converted into banknotes if necessary.
The digital euro would also make it possible to “reduce dependency [de l’UE] towards the large non-European private payment service providers that currently dominate the landscape”, according to the central bank in its progress report last June.
According to the central bank, sellers will also benefit as customers will be familiar with the payment system and therefore more likely to purchase their products.
But if someone still wants to pay in cash, they can do that too.
“Cash remains important: it is still the preferred method for making small payments in stores, and transactions between individuals,” can be read in a blog post from the central bank.
“Most people in the eurozone want to keep the possibility of paying with notes and coins. The project is currently in a “preparation phase”, during which the central bank must finalize a set of rules to regulate payments made with the digital currency, and it must also develop a possible deployment plan.
The central bank is also studying ways to prevent fraud and cyber attacks, according to the progress report.
ADVERTISEMENTThe ECB said users could create a digital wallet in euros through a bank or post office. Only then can they start using the wallet once they have deposited money into it.
The central bank’s decision on the establishment ofa digital euro will be known, at the latest, by October 2025.
