Regional responses to CBDCs
Plenty of regions and countries have noticed these benefits and have been exploring how to build CBDC functionality and address the accompanying concerns and opportunities. For example, the US Federal Reserve is interested in how these assets can preserve the US dollar’s global dominance and encourage innovation in the private sector. That being said, there are potential risks and policy considerations that governments are examining. CBDCs will change elements of present-day financial systems, and that could mean less leverage over monetary policy. Governments are also exploring the potential privacy concerns and financial crimes that might arise from the use of these digital assets. These concerns have often prompted a cautious approach to CBDCs.
In Europe, for instance, central banks spotted the opportunities and challenges related to digital currencies early on (in fact, the Bank of England raised questions around CBDCs back in 2015). But while the Banque de France has run several remarkable experiments around wholesale central bank digital currency (including a test of a fully digital euro and Swiss franc), this currency isn’t accepted within the European regulatory frameworks. At least, not yet.
Other regions have taken more assertive approaches based on their needs. Asian countries often face high remittance and cross-border trading costs, limited financial inclusion, and overreliance on the US dollar—issues that could be addressed by CBDC-related programs. For example, China released its digital currency electronic payment (DCEP) pilots in mid-2020 that aim to expand access for the unbanked while also simplifying transactions. But these DCEP pilots aren’t the only initiatives coming to fruition in Asia. Thailand and Hong Kong created a CBDC platform using distributed ledger technology, while Singapore launched Project Ubin to explore blockchain technology for securities settlement and cross-border payments.
This is just an initial glimpse of the global digital assets landscape. To get a fuller picture, download our report. It offers critical insights into the development of digital assets in the United States, Europe, Africa, India, and broader APAC regions. The full effects of implementation efforts, particularly worldwide, have yet to be determined. But as the process unfolds, we’ll be watching—and we invite you to join us.
