A History of Central Bank Digital Currencies Across the World

The concept of Central Bank Digital Currencies (CBDCs) has been around for a while, and it's interesting to see how different countries have approached this idea. China was one of the first countries to experiment with a digital currency, with the People's Bank of China launching a pilot program for the digital yuan in 2020.

The digital yuan is designed to be used in conjunction with traditional cash and credit cards, and it's expected to be widely used in the coming years. In fact, the Chinese government has already announced plans to roll out the digital yuan to major cities across the country.

Sweden has also been exploring the idea of a digital currency, with the Riksbank launching a pilot program for an e-krona in 2016. The e-krona is designed to be a digital version of the traditional Swedish krona, and it's expected to be used for both retail and wholesale transactions.

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Central banks around the world are exploring the idea of issuing a digital version of their currency, known as a Central Bank Digital Currency (CBDC). There are currently cross-border CBDC projects underway, involving multiple countries and use cases.

CBDCs are different from existing cryptocurrencies, such as Bitcoin, which are decentralized and not backed by a central authority. CBDCs, on the other hand, are issued by central banks and are backed by the full faith and credit of the government.

Some countries are motivated to issue CBDCs to promote financial inclusion, while others want to increase efficiency in payments and lower transaction costs. The motivations for issuing CBDCs vary from country to country, depending on their economic situation.

There are several challenges associated with launching a CBDC, including the risk of a run on banks and the need for a complex regulatory framework. CBDCs also carry operational risks, such as vulnerability to cyber attacks.

The national security implications of a CBDC are also a concern, as new payments systems can create externalities that impact the daily lives of citizens and potentially jeopardize national security objectives.

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Brazil has been exploring a CBDC since at least 2020, after the successful rollout of PIX, an instant payment system created by the Brazil Central Bank (BCB).

The BCB indicated that it would launch a pilot of the digital real in 2022, with a final version expected in 2024.

Brazil's digital real will increase the efficiency of the monetary system, facilitate the faster and safer settlement of international financial transactions, and help fight money laundering, corruption, tax evasion, drug trafficking, and terrorism.

India has been working on a CBDC since 2020, with the Reserve Bank of India (RBI) announcing a regulatory sandbox to test next-generation technologies on cross-border payments in December 2020.

The RBI plans to launch a pilot project for the digital rupee in 2023, with a final version expected in 2024.

Russia has been working on a CBDC since 2017, with the Bank of Russia announcing plans to launch a digital ruble in October 2017.

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The digital ruble will be built on a hybrid platform that combines distributed ledger technology (DLT) and central control from the Bank of Russia.

Here are some countries that have made significant progress on their CBDCs:

The United Arab Emirates (UAE) has also made progress on its CBDC, with the Central Bank of the UAE announcing the commencement of the implementation of the CBDC strategy in March 2023.

The UAE sent the first cross-border payment using the Digital Dirham in January 2024.

The United States has expressed interest in CBDCs, with the Federal Reserve releasing a report on the economic context and weighing the benefits and risks of CBDCs in January 2022.

However, the Federal Reserve has not confirmed plans to launch a CBDC.

Brazil is making significant strides in developing its digital currency, the digital real. The Central Bank of Brazil received praise from the International Monetary Fund for its role in driving financial innovation and expanding digital financial services in Latin America.

The country has been exploring a CBDC since at least 2020, following the successful rollout of PIX, an instant payment system created by the Brazil Central Bank. Over 7 billion transactions have been completed, with more than 60% of the adult population using PIX.

A digital real issued by the BCB would increase the efficiency of the monetary system, facilitate faster and safer international financial transactions, and help fight money laundering, corruption, tax evasion, drug trafficking, and terrorism. This is according to Senator Rodrigo Cunha, president of Brazil's Science and Technology Commission.

Conflicting reports have emerged regarding the technology used in Brazil's digital real pilot. The lithosphere cryptocurrency platform, developed by KaJ Labs, claimed to be partnering with the BCB, but the BCB later debunked this claim.

The BCB aims to launch a pilot of the digital real in 2022, with a final version expected in 2024. This will likely involve a phased rollout, starting with a pilot scheme and then expanding to a wider audience.

Here are some key facts about Brazil's digital real:

China has been actively working on its digital currency, known as the digital yuan or e-CNY, since 2014. The central bank organized a number of banks and institutions to jointly develop the DCEP system in 2017.

The digital yuan was first tested in four big Chinese cities: Shenzhen, Suzhou, Xiong'an, and Chengdu, with Shenzhen and Suzhou trials choosing participants through a lottery. The Suzhou trials enabled users to make near-field communication (NFC) offline payments, a feature designed for people in rural areas.

By 2021, Chinese cities had expanded the use of the digital yuan within their public transportation networks. Chengdu became the first city to implement e-CNY payments across its entire public transportation system.

In 2021, there were 261 million users in the extended trial who had made US$13.8 billion of transactions. The digital yuan has also been rolled out for foreign attendees at the 2022 Winter Olympics in Beijing.

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The People's Bank of China has announced that the testing has been further expanded to six additional regions: Tianjin, Chongqing, Guangzhou, Fuzhou, Xiamen, and six cities in the province of Zhejiang that are hosting the 2022 Asian Games.

Here are the cities that have integrated e-CNY into their public transit systems:

China's goals for its digital currency in 2023 are to continue testing and learning, as well as setting international standards for digital currencies.

Ecuador had a pioneering retail CBDC called Dinero Electrónico (DE) from 2014 to 2018. It was a mobile phone-based system that operated through citizens' mobile phones, reaching over 400,000 accounts and more than $10 million in deposits.

The program's success was hindered by a combination of factors, including a defective implementation and commercial bank opposition. Incumbent banks perceived DE as a threat to their payment business, fearing a loss of revenue from processing payments and a potential reduction in their customer base.

The banking sector's opposition was so strong that it contributed significantly to DE's demise, as admitted by the new government's BCE general manager.

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India is planning to introduce a digital rupee, also known as a central bank digital currency (CBDC), by 2023.

The Reserve Bank of India (RBI) will be issuing the digital rupee, which will be used for domestic and cross-border payment processing and settlement, according to the RBI Payments Vision 2025 document.

The RBI has classified the digital rupee into two categories: retail CBDC, designed for individual financial needs, and wholesale CBDC, traded between RBI, public, and private sector banks for currency distribution and economic stability.

Pilot projects for the digital rupee were launched on November 1, 2022, marking a significant step towards its widespread adoption.

The RBI has proposed a bill to ban trading and investments in cryptocurrencies, while giving the RBI the legal power to develop the CBDC.

India is one of the largest economies to issue a CBDC, and its introduction is expected to boost the economy, increase efficiency, and decrease costs of the country's currency management system.

The RBI has expressed concern that the wide adoption of private cryptocurrencies would undermine the ability of authorities to control money supply or interest rates.

India will be taxing private cryptocurrency transactions at a flat rate of 30%, as announced by the Government of India in January 2021.

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Norway has been actively exploring the concept of a Central Bank Digital Currency (CBDC).

In April 2021, Norges Bank announced plans to start testing technical solutions for a CBDC over the following two years after four years of research.

Singapore has made significant strides in the development of CBDCs. On June 21, 2023, the Monetary Authority of Singapore (MAS) published a whitepaper proposing a common protocol to specify conditions for the use of digital money, including CBDCs, on a distributed ledger.

This whitepaper was developed in collaboration with the International Monetary Fund, Bank of Italy, Bank of Korea, financial institutions, and fintech firms.

Uruguay was one of the first countries to experiment with a digital currency, with the central bank announcing a test to issue digital Uruguayan pesos in November 2017.

The central bank of Uruguay took a proactive approach to exploring digital currency by launching a test to issue digital Uruguayan pesos.

Uruguay's move to test digital currency reflects a growing interest in central bank-issued digital currencies (CBDCs) around the world.

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Regional CBDC Initiatives have been gaining momentum globally, with various countries exploring the potential of central bank digital currencies.

The New Atlanticist reported on cross-border CBDC projects that aim to facilitate international transactions.

These projects involve multiple countries collaborating to develop and implement CBDCs that can be used across borders.

A notable example is the contributions from a team of experts, including Nitya Biyani, Stefan de Villiers, and others, who shared their insights on cross-border CBDC projects.

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134 countries and currency unions are exploring a central bank digital currency (CBDC), representing 98% of global GDP. This number has skyrocketed from 35 in May 2020.

Every G20 country is exploring a CBDC, with 19 of them in the advanced stages of CBDC exploration. 13 of these countries are already in the pilot stage.

Three countries have fully launched a CBDC: the Bahamas, Jamaica, and Nigeria. In Nigeria and the Bahamas, CBDC issuance has increased substantially.

44 ongoing CBDC pilots are underway, including the digital euro. European countries are increasingly testing wholesale CBDCs, both domestically and across borders.

In every country with an advanced retail CBDC project, CBDCs are intermediated, meaning they are distributed through banks, financial institutions, and payments service providers.

The US is participating in a cross-border wholesale CBDC project, Project Agorá, with 6 other major central banks. However, the US Senate has not acted on a bill prohibiting the direct issuance of a retail CBDC.

Since Russia's invasion of Ukraine, cross-border wholesale CBDC projects have more than doubled, with 13 projects now underway.

Nine countries have fully launched a CBDC, including Nigeria, the Bahamas, and Jamaica. Eight of these countries are located in the Caribbean.

Here is a list of the nine countries that have already launched a CBDC:

The United States has been exploring the idea of a central bank digital currency (CBDC) since 2021. Federal Reserve Chair Jerome Powell announced plans to publish a discussion paper on CBDC, focusing on the possibility of issuing a US CBDC.

In May 2021, Powell believed a potential CBDC would complement the use of cash and bank deposits rather than replacing them. The Digital Dollar Project, a private initiative, planned to launch five pilot programs testing the potential use of a CBDC in the US.

The Federal Reserve Bank of Boston released initial details of Project Hamilton, a potential US CBDC, in February 2022. Project Hamilton would not be decentralized nor have mining, incorporating some of the architecture of bitcoin.

President Biden issued an executive order in March 2022, directing Congress to assess the technological infrastructure and capacity needs for a potential US CBDC.

The Federal Reserve Bank of New York's Innovation Center (NYIC) announced a 12-week proof-of-concept pilot program in November 2022. The pilot will build a prototype and test a regulated liability network (RLN) that provides a multi-asset, always-on, programmable infrastructure.

Several major US banks are participating in the pilot, including BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo. Swift will support international interoperability.

The Federal Reserve released a report in January 2022, weighing the potential risks and benefits of a US CBDC. The report indicated that a CBDC should provide benefits to households, businesses, and the overall economy that exceed any costs and risks.

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Here are the key requirements for a US CBDC, as stated in the Federal Reserve's report:

In January 2025, President Donald Trump signed an executive order prohibiting agencies from undertaking any action to establish, issue, or promote CBDCs within the US or abroad.

Central banks around the world are exploring the potential of central bank digital currencies (CBDCs). The New Atlanticist reported on cross-border CBDC projects, where multiple countries are collaborating on implementing CBDCs.

These projects involve contributions from experts in the field, including Nitya Biyani, Stefan de Villiers, and Matt Goodman. The goal of these projects is to learn from each other's experiences and develop more effective CBDC systems.

Some countries are already making progress on their CBDC implementations, such as the participating countries in the cross-border CBDC projects mentioned earlier.

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In recent years, central bank digital currencies (CBDCs) have gained significant attention worldwide. China was the first country to launch a CBDC, the Digital Currency Electronic Payment (DCEP), in 2020.

Sweden's Riksbank is exploring a CBDC, e-krona, with a focus on accessibility and financial inclusion. This is a notable development given the country's high rate of cash usage.

The Bahamas' Sand Dollar, launched in 2020, is a CBDC that can be used for both online and offline transactions. It's a significant step forward for the country's financial infrastructure.

The European Central Bank (ECB) has been studying the potential of a CBDC, with a focus on its implications for monetary policy and financial stability. This research is ongoing, with no clear timeline for implementation.

The Bahamas' Sand Dollar has been successful in increasing financial inclusion, with over 80% of the population using the digital currency. This is a testament to the potential of CBDCs to expand access to financial services.

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