Regional responses to CBDCs
Many regions and countries have noticed these benefits and have explored how to build CBDC functionality and address the resulting concerns and opportunities. For example, the US Federal Reserve is interested in how these assets can maintain the global dominance of the US dollar and encourage innovation in the private sector. That being said, there are potential risks and political considerations that governments are considering. CBDCs will change elements of current financial systems, which could mean less influence over monetary policy. Governments are also investigating potential privacy issues and financial crimes that could arise from the use of these digital assets. These concerns have often prompted a cautious approach to CBDCs.
In Europe, for example, central banks spotted the opportunities and challenges of digital currencies early on (in fact, the Bank of England raised questions about CBDCs in 2015). But while the Banque de France has conducted several notable experiments around wholesale central bank digital currency (including a test of an all-digital euro and Swiss franc), this currency is not accepted in European regulatory frameworks. At least not yet.
Other regions have adopted more assertive approaches depending on their needs. Asian countries often face high remittance and cross-border trade costs, limited financial inclusion, and overreliance on the US dollar, issues that could be addressed through CBDC-related programs. For example, China launched its Digital Currency Electronic Payment (DCEP) pilots in mid-2020 that aim to expand access for the unbanked while simplifying transactions. But these DCEP pilots are not the only initiatives to materialize in Asia. Thailand and Hong Kong have created a CBDC platform using distributed ledger technology, while Singapore has launched the Ubin project to explore blockchain technology for securities settlement and cross-border payments.
This is just a first look at the global digital asset landscape. To get a more complete picture, download our report. It offers essential information on the development of digital assets in the United States, Europe, Africa, India and the wider APAC regions. The full effects of enforcement efforts, particularly around the world, have yet to be determined. But as the process unfolds, we’ll be watching and inviting you to join us.