CBDC developments : the state of digital currencies worldwide in early 2024

Elizabeth Smith

Across various regions, central banks are actively exploring and testing digital currencies, each with unique approaches and considerations. From embracing permissionless blockchains to prioritizing privacy in digital currency ecosystems, these developments underscore the evolving landscape of monetary innovation.

Euro area: embracing permission-less blockchains

The latest draft of digital euro legislation by the European parliamentary Committee on Economic and Monetary Affairs signals a significant shift, endorsing permissionless blockchains.

Conditional payments in Digital Euros may soon be facilitated on these blockchains, expanding the realm beyond privately issued assets like crypto-assets or stable coins.

However, the legislation ensures that the European Central Bank retains control, specifying that such payments will occur in a layer above the base layer, in line with ECB and European Council preferences.

Read also: By 2026 we will have the digital euro: implementation phase on the way

Hong Kong: expanding CBDC testing

The Hong Kong Monetary Authority (HKMA) is set to broaden its central bank digital currency (CBDC) testing. Residents will soon have the opportunity to open and top up digital yuan (e-CNY) wallets via the local fast payment system.

Phase 1 of the pilot program, concluded in October 2023, focused on domestic e-HKD retail use cases, exploring programmable and offline payments, as well as tokenized deposits.

India: adding programmability and offline payments to CBDC

The Reserve Bank of India (RBI) is enhancing its CBDC pilot by incorporating programmability and offline payments. Programmability aims to facilitate transactions for specific purposes, while offline functionality ensures accessibility in areas with poor internet connectivity.

This move suggests the introduction of “purpose-bound money” with embedded programming logic, emphasizing targeted usage.

Indonesia: advancing Digital Rupiah development

Bank Indonesia (BI) continues to develop its digital rupiah, albeit in the conceptual design stage or proof of concept. Despite not being slated for launch this year, BI remains committed to exploring digital currency advancements.

Philippines: pursuing wholesale CBDC implementation

The Governor of Bangko Sentral ng Pilipinas (BSP) anticipates implementing a wholesale CBDC within the next two years.

However, the decision to forgo blockchain or Distributed Ledger Technology (DLT) raises questions regarding its classification as a wholesale CBDC. This divergence from market convention challenges the definition of wholesale CBDC projects.

Russia: expanding Digital Ruble pilot program

Seventeen banks are preparing to join the Bank of Russia’s digital ruble pilot program, having signed agreements and commenced system implementations. The pilot, already involving 13 banks, along with citizens and companies, aims to explore the digital ruble’s potential and feasibility.

Türkiye: progressing with Digital Turkish Lira testing

The Türkiye Cumhuriyet Merkez Bankası (CBRT) advances its digital Turkish lira testing, following a successful first phase.

The project, initiated in 2020, focuses on retail payments, involving technical groundwork, system design, digital identity integration, and pilot tests. Findings from this phase will guide subsequent pilot expansions and collaboration enhancements.

United Kingdom: exploring Digital Pound with emphasis on privacy

The Bank of England (BOE) and HM Treasury seek input on a digital pound, emphasizing privacy protection while maintaining anti-financial crime measures.

Despite the necessity for user identification, the BOE and government assure limited access to personal data within the digital pound ecosystem. Technological solutions are being explored to prevent core ledger access to personal data.

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