Central Bank Digital Currencies (CBDCs) are believed to be in development by over 110 different countries at this point. The following are a few developments surrounding these assets from the past week.
eNaira Set to Launch
We have highlighted developmental steps of the Nigerian CBDC on multiple occasions to date. Now, the time has finally come for the asset to officially launch. In a recent conference, Nigerian Governor Godwin Emefiele indicated that this major step would occur in mere days.
Made possible through its strategic partnership with Bitt Inc., Governor Emefiele indicates that the launch of the eNaira would allow for Nigeria to become, “…one of the first countries in Africa, and indeed the globe, to adopt the digitization of its national currency.”
Federal Reserve Solicits Input
While the United States has been fairly quiet on the CBDC front, this does not mean that one is not in development behind the scenes. We have known since 2020 that the Federal Reserve is working with M.I.T to study such an asset.
This work will soon take another step forward, as the Federal Reserve is expected to release a paper on its findings thus far in the coming days, per the WSJ. This paper is also expected to solicit commentary from the public on a potential CBDC.
As it stands, the US Dollar already exists as an increasingly digital currency. With this being the case, there are those that believe the launch of a CBDC may be pointless, failing to facilitate the financial inclusion many associate with such an asset. This upcoming paper should help for the Federal Reserve to get a better read on the pulse of the nation, and whether it shares this skepticism.
Laos Mulls-Over a CBDC
It is being reported that Laos has become the latest nation to join the ranks of those considering the development/launch of a CBDC.
This particular endeavor has seen Laos partner with Soramitsu – a Japanese company already boasting experience with digital currencies through an ongoing strategic partnership with Cambodia. Notably, Soramitsu is also being considered in a similar role by the Monetary Authority of Singapore (MAS).
The purpose of this partnership is similar to many that have been announced in recent months by central banks – study the need, benefits, and risks, of a CBDC.
Top CBDC Issues to Consider
In a recent discussion, headlined by Kristalina Georgieva, Managing Director of the IMF, CBDCs were touched upon on various occasions. Notably, a few key areas were highlighted as critical issues which need to be considered before such assets become widespread.
- Does the public believe in CBDCs, stablecoins, etc. as a medium they can trust.
- Will assets such as CBDCs help facilitate more stable economic transactions?
- What rules must be established if digital assets are to be a boon, rather than a burden.
Despite these potential hurdles, it was made clear that CBDCs still hold the potential to greatly increase the efficiency of financial transactions – from both a time and cost perspective.
“Digital currencies issued by central banks can reduce the time needed for cross border payments to seconds, and sharply cut costs. Clearly the possibilities, but also the perils of new technology will need to be carefully managed.” – IMF Managing Director Kristalina Georgieva
This potential is not lost on central banks, with Georgieva stating that a survey conducted by the IMF indicated, “110 countries are at some stage of looking into CBDCs”