The Central Bank of Nigeria’s eNaira and the Bahamas Sand Dollar led the global central bank retail project indices in the 2022 PricewaterhouseCoopers. Central bank digital currency (CBDC) Global index.
Entitled ‘The race to digital money is on’, PwC’s index analyzes and ranks the top retail and wholesale CBDC projects. The index also assesses the current stage of CBDC project development taking into account the opinion of the central bank and the public interest.
PwC in its latest index report said that more than 80 percent of central banks are considering launching a central bank digital currency (CBDC) or may have already done so.
“Retail projects in the Index are led by the Central Bank of Nigeria (CBN) eNaira, the first CBDC in Africa, and the Sand Dollar, issued by the Central Bank of the Bahamas as legal tender in October 2020, which makes the Bahamas the first country to launch a CBDC,” said the report published on Tuesday.
In general, the report indicated that retail CBDC projects (digital currencies designed for public use) have reached higher levels of maturity than wholesale projects (digital currencies used by financial institutions that have accounts with central banks), and that the year In the past there were advances in several prosperous wholesale pilots.
Index Performance
The report says that China became the first major economy to pilot a CBDC in 2020 with the digital yuan, and as of March 2022, pilot programs are running in 12 cities, including Beijing and Shanghai.
On the wholesale side, the leading project in the Index is the combined effort of the Hong Kong Monetary Authority (HKMA) and the Bank of Thailand (BoT) to launch the mBridge project, according to the PwC report.
He said the mBridge project is focused on developing a proof-of-concept prototype to enable real-time cross-border foreign exchange payments on distributed ledger technology.
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Similarly, the work of the Monetary Authority of Singapore (MAS), with two new CBDC projects, ranks high in the index and continues with the development of a wholesale CBDC for cross-currency payments.
Expert opinions
Haydn Jones, UK blockchain and crypto specialist at PwC, said: “This year’s index shows that central banks are ramping up activity in the digital currency space. Countries are at different levels of maturity with CBDCs and each country has different motivating factors.”
He said that increasing financial inclusion, the facilitation of cross-border payments and the control of financial crimes are factors that come into play.
“We expect CBDC research, testing and implementation to ramp up in 2022,” added Mr. Jones.
He said the success of Nigeria’s eNaira is likely to spur CBDC development in countries where financial inclusion is one of the key desired outcomes.
In his remarks, John Garvey, PwC’s global financial services leader in the US, said: “It’s especially important for financial institutions to understand where central banks are with digital currencies because ultimately CBDCs will start to flow through the payment system and will start to affect the bank balance. sheets.”
He said careful consultation with central banks is critical to clarifying the business case for CBDCs, from an inclusion, financial performance and interoperability perspective.
“One thing that is clear, reducing the cost of payments in an economy provides value throughout the economy and for citizens. If CBDCs can finally enable more efficient payments, that will benefit everyone,” Garvey added.