A comprehensive study released on Thursday reveals that 134 countries, representing 98% of the world economy, are actively exploring digital versions of their currencies. Over half of these nations are in advanced development, pilot, or launch stages, marking a significant shift in global financial landscapes.
US Trails in Digital Currency Adoption: While most G20 nations, except Argentina, are advancing rapidly in adopting digital currencies, the United States is notably falling behind. Despite progressing with a “wholesale” digital dollar for banks, the initiative for wider public adoption appears stalled. Federal Reserve Chair Jerome Powell recently stated that such efforts are not close to implementation.
Political Divide and Global Implications: Digital currencies have become a divisive political issue in the US, with President Joe Biden’s administration exploring the concept while facing opposition from Republican leaders like Donald Trump. This divide poses risks to the US’s global financial influence and could lead to a fragmented international payments system.
Global Trends in Digital Currency Adoption: China, Europe, and Japan lead the global push towards Central Bank Digital Currencies (CBDCs). China’s e-CNY pilot involves 260 million people across 25 cities, while the European Central Bank is in advanced preparations for a digital euro. Some countries like the Bahamas, Jamaica, and Nigeria have already fully implemented their digital currencies, while others, like the Eastern Caribbean Currency Union, faced technical challenges.
Implications of Digital Currency Growth: The study highlights a surge in wholesale CBDC projects since geopolitical tensions escalated, with cross-border initiatives like “mBridge” connecting various countries. The BRICS nations (Brazil, Russia, India, China, South Africa) are leading the charge, aiming to establish alternative payment systems to reduce reliance on the US dollar.
Future Outlook and Uncertainties: Experts predict a wave of major digital currency launches by 2027, potentially reshaping global finance. China’s digital yuan remains the most advanced, with widespread testing across various sectors. However, the timeline for full implementation remains uncertain, with projections pointing to 2025 or 2026.
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