Which Governments are Researching CBDCs Right Now? [2021 Update]
The political and economic rationale for issuing central bank digital currencies can differ significantly per jurisdiction. Declining cash usage, a global pandemic, and a desire to keep up with other central banks accelerated CBDC research in countries that previously had no firm stance on CBDCs a year ago. Some CBDCs fail to gain traction because of minimal trust in the government (Ecuador.) We’ve seen CBDCs being researched and implemented to combat inflation (Turkey, Venezuela.)
Various countries are eyeing CBDCs to skirt sanctions or control from other countries. Nations sanctioned by the US, including Iran, Cuba, and are devoting significant technical resources to develop their own CBDCs. Palestine plans to issue a digital currency to circumvent Israel’s control. The Lebanese government claims that the deep ties between the bank and the government lead to low public trust, leading to an estimated $10billion stored in homes instead of banks. A Lebanese CBDC built upon transparency would restore confidence in the banking sector, which speaks to one of the primary purposes of a CBDC: to ensure confidence in money and the monetary system.
This article is an updated list of Central Banks that have launched, are in development, are currently researching, or have canceled their CBDC projects.
In 2017, the Central Bank of Bahama announced the Sand Dollar, a CBDC, to modernize and streamline the country’s financial system, reduce service delivery costs, increase transactional efficiency and improve financial inclusion. The Sand Dollar is backed 1:1 to the Bahamian dollar (BSD), which, in turn, is pegged to the US dollar. Following a successful 2019 pilot on the island conglomeration of Exuma, the Sand Dollar became the first CBDC in the world to successfully transition beyond the pilot stage and achieve an official launch in October 2020. The Central Bank later announced that its Sand Dollar is expected to reach full interoperability between its various wallet providers within the week. (March 26, 2021)
The Reserve Bank recently announced a partnership between Commonwealth Bank, National Australia Bank, Perpetual, and ConsenSys Software for a collaborative project to explore the potential use and implications of a wholesale CBDC.
The Central Bank of Bahrain moved from the early stages of researching a CBDC in 2018 to conducting a study on the possibilities of launching the digital version of its currency- the Bahraini dinar, according to CBB Governor Rasheed Al Maraj. In early 2020, the bank announced that it would pilot the CBDC Policy-Maker Toolkit developed by the World Economic Forum as part of the CBB’s research on the impact of digital currencies on the economy.
In 2018, Bermuda’s Government created a comprehensive crypto framework and worked quietly towards a potential pilot program. In February 2021, the Bermuda dollar pilot test began. Under the pilot program, popular local rum company Gosling’s Limited announced that it would accept digital Bermuda dollars.
To research how technologically suitable the Estonian e-government core technology is for operating a central bank digital currency. Estonia’s e-Residency program, which allows foreign nationals to apply for an Estonian digital ID and gain digital services access, announced a digital token proposal named “Estcoin” in 2017.
Eswatini is a landlocked country in South Africa, previously named Swaziland. In 2019, the Central Bank of Eswatini conducted a four-phase diagnostic study to investigate possible use cases for a CBDC implementation. The study sought to understand which explicit value a CBDC would contribute to the Eswatini financial system and whether further exploration would be justified. Read the Phase 1 Findings here.
🇪🇺 European Central Bank
2020 – The European Central Bank released a report on the digital Euro, detailing how it could support current objectives while providing citizens access to a secure form of digital money. The report mentions that a digital euro could serve as a unifying force in Europe’s digital economies. A digital euro would also be an emblem of the ongoing process of European integration.
In December 2020, the Banque de France successfully experimented on Central Bank digital currency (CBDC). In July 2020, the Bank of France selected eight applicants to experiment with a digital euro (Madre) for interbank settlements. The test is experimental and will not be used commercially, but it intends to investigate a digital euro system.
2021- Bank Indonesia (BI) is mulling over the idea of creating a rupiah-denominated digital currency in line with the global trend. Still, Indonesian stakeholders and observers have told The Jakarta Post that the plan had a long way to go despite the potential benefits.
In October 2020, the Bank of Japan released its “Approach to Central Bank Digital Currency,” which revealed that it would launch a CBDC feasibility study in April 2021. The Bank of Japan is also currently researching DLT in cooperation with the Bank of England in a project called “Stella.”
In October 2020, The Central Bank of Kenya (CBK) entered discussions with other global Central Banks on the possibilities of entering the digital currency space. “We are already having discussions with other global players, in various ways, around the introduction of Central Bank Digital Currencies. The push comes as a result of mushrooming of private cryptocurrencies, and we are already feeling left out and need to create our own space,” said Central Bank of Kenya Governor Dr. Patrick Njoroge.”
The Lebanese CBDC project is part of a “regulatory mechanism” to restore confidence in Lebanon’s troubled banking sector. Since Lebanon’s private banks have deep ties to the Government, they both suffer from a low public trust. The Governor of the Central Bank of Lebanon Riad Salamed reports that Lebanese citizens currently store over $10 billion in their homes. Lebanon also looks to CBDCs to move to a “cashless system” that enables more seamless cash movement locally and abroad. In November 2018, Riad Salameh commented that the Bank has a working group researching digital currency implementation, which would be pegged to the Lira. Lebanon’s chief central banker said the country is preparing a national digital currency (CBDC) for a 2021 debut.
In 2017, the Bank Negara Malaysia published an initial research paper on CBDCs and their implementation.
In April 2019, the State Bank of Pakistan declared that it was working on a concept to issue a digital currency by 2025. The stated goals for issuing a digital currency are to promote financial inclusion and reduce inefficiency and corruption.
In 2019, the National Bank of Rwanda revealed that it is exploring ways to issue a CBDC. Noting outstanding questions around the technology, the National Bank’s Financial Stability Director-General Peace Masozera Uwase said, “We will join in once we are ready.”
The Monetary Authority of Singapore announced Project Ubin in 2016, in cooperation with ConsenSys, to test clearing and settling of payments and securities using blockchain technology. After five phases through 2020, the MAS collaborated closely with industry partners to explore the development of blockchain-based settlement systems. This culminated in the development of a prototype for digital multi-currency settlement in Phase 5.
🇿🇦 South Africa
In 2018, the South African Reserve Bank (SARB), in consortium with seven commercial banks, used Quorum to create Project Khoka. This blockchain-based interbank system processed the typical daily volume of payments with complete confidentiality and finality in record time. After success, the SARB announced phase two of Project Khoka, which will issue, clear and settle debentures on DLT using tokenized money in a minimum viable product (MVP) to inform policy and regulatory reflections. During Project Khoka 2, participants will purchase debt instruments with a wholesale CBDC (wCBDC) and a wholesale digital settlement token (wToken). The wToken can be thought of as a privately issued stablecoin used for interbank settlement.
🇰🇷 South Korea
In April of 2020 Bank of Korea announced the launch of a pilot program to assess the logistics of issuing a CBDC. Following theoretical research conducted in February 2020, the pilot comprises a technological and legal review of CBDC issuance from March 2020 through December 2021. The initial phase is to define the requirements and design of the CBDC. Next is a review of the technology required to implement the currency. Finally, there will be an analysis of business processes, making a 12-month build and test of the CBDC pilot system.
As a country with one of the lowest cash-usages globally, Sweden was able to develop the e-Krona quickly than others. The Swedish Riksbank has just extended its digital currency pilot from February 2020 to February 2022.
The Bank of Thailand (BoT) launched the first phase of its plans to experiment with a wholesale CBDC in August 2018. A year later, the Hong Kong Monetary Authority (HKMA) joined the Inthanon-LionRock project to collaborate on research and share experiences from their respective CBDC studies. BoT published a joint report with the HKMA in Jan 2020, concluding that the CBDC has significant potential to prevent risks and reduce costs from traditional banking intermediaries.
🇹🇹 Trinidad and Tobago
The Central Bank of Trinidad and Tobago published an initial study of use cases and possible implementation of CBDCs in 2021.
After the National Bank of Ukraine started exploring the possibility of issuing its digital currency back in 2016. The Bank completed a national digital currency pilot, the e-hryvnia, in late 2019. The Ukrainian Government presented a new bill on digital assets to legitimize the sector — and this time, the attempt may well be successful. According to the “Strategy of fintech development in Ukraine until 2025,” the regulator will issue a central bank digital currency dubbed e-hryvnia. Unlike today’s digital assets, the CBDC will be considered legal tender.
The Central Bank of Uruguay began exploring a token’s viability that would serve as a digital version of its fiat counterpart, making Uruguay the first country to conduct a large-scale CBDC pilot program in November 2017.
e-Peso users could pay instantly at registered businesses and conduct P2P transactions through digital wallets. After a favorable initial assessment of the pilot project, evidence suggests that the pilot CBDC reached some unbanked population in remote areas. It is imperative to note that the ePeso does not use blockchain technology.
Codefi Payments enables digital currency settlement for CBDCs and asset-backed stablecoins. We offer a Digital Currency Technology Sandbox for central banks, banks, payment service providers, and corporations to facilitate digital currency discovery and experimentation.
Sep 2020 – Although Brazil only recently started studying digital currencies, Brazil could have CBDC in two years, says the Central Bank president. The Central Bank of Brazil runs Project SALT, an interbank payments contingency and resiliency system, and Project PIER, a decentralized information exchange platform.
🇰🇳 🇱🇨 🇻🇨 🇬🇩 🇩🇲 🇦🇬 Caribbean Countries
including Saint Kitts and Nevis, St. Lucia, St. Vincent & Grenadines, Grenada, Dominica, Antigua & Barbuda.
The Eastern Caribbean Central Bank conducted a blockchain-issued CBDC pilot in early 2019–with a goal of a resilient payment system and broader financial inclusion across all people in the Eastern Caribbean Currency Union. The DXCD stablecoin will stand at 1:1 with the region’s official banknotes. The DXCD will also facilitate various financial transactions, including payments between consumers and merchants, peer-to-peer transactions such as money transfers between people in the Eastern Caribbean Currency Union.
People’s Bank of China introduced the DC/EP to provide a convenient yet more efficient and secure retail payment system. Also, Monetary Sovereignty, Internationalization. In April 2020, China became the world’s first major economy to pilot a digital currency. People’s Bank of China aims for widespread domestic use of the DC/EP by the 2022 Winter Olympics in Beijing.
The Centrale Bank van Curaçao en Sint Maarten (CBCS) is exploring creating a CBDC. In August 2018, the CBCS and the Barbados-based fintech company Bitt Inc. signed a Memorandum of Understanding (MOU) to jointly explore the feasibility of issuing CBDC (a digital Curacao and Sint Maarten guilder) for the two nations. The MOU noted that the Central bank seeks to “address its challenges proactively by exploring the latest technology available, for example, to reduce the level of cash usage within the monetary union, and to facilitate more secure, more AML and KYC compliant, and more efficient financial transactions in and between Curacao and Sint Maarten.”
🇭🇰 Hong Kong
The Hong Kong Monetary Authority (HKMA) partnered with ConsenSys, PWC, and Fintech Forms HK for the second phase of Project Inthanon-LionRock. Launched in 2019,
Project Inthanon-LionRock explores the use of distributed ledger technology (DLT) in cross-border fund transfers.
🇲🇭 Marshall Islands
In 2018, the Republic of the Marshall Islands released plans to issue its CBDC, the so-called Sovereign (SOV). Until now, the Marshall Islands have not had their own national currency; the US dollar has been legal tender. This is now to change. After its introduction, the SOV will be the second, exclusively digital, legal tender.
The Central Bank of Mauritius (BoM) first began exploring a CBDC in November of 2019, intending to make the country a regional leader. A well-regulated central bank-issued digital currency becomes a reality.
The Central Bank of the Republic of Turkey began research in 2018 when the steep decline in its monetary value suggested that an economic crisis was near. In attempt to prevent a similar incident from taking place in the future, Turkish President Recep Tayyip Erdogan planned to bolster the country’s economy by creating the national central bank digital currency Digital Lira.
In February 2020, the Bank of Canada completed the fourth phase of Project Jasper, a significant milestone in the payments industry. Launched in 2017, Project Jasper marked the first partnership experiment of blockchain between a central bank and the private sector. During the most recent fourth phase, The Bank has partnered with the Monetary Authority of Singapore (Project Ubin) and the Bank of England to work on a cross-border, cross-currency settlement system. Bank of Canada is pursuing a contingent strategy to launch CBDC to create a state of acceptable policy and operational readiness.
In 2019, the Bank of Canada’s stance was that it had no concrete plans to launch a CBDC. Instead, the Bank is building the capacity to issue a general-purpose, cash-like CBDC should the need to implement it arise. In 2021, in response to Covid-19 and its impact on cash usage, deputy governor Timothy Lane stated that the Bank of Canada has begun to accelerate work on a CBDC.
The Central Bank of Chile is exploring blockchain-based bonds. According to Mario Marcel, Governor of the Central Bank of Chile, the proof-of-concept is ongoing, and a report is expected to get released in November.
Publishing the “One Bank Research Agenda” in February 2015 places the Bank of England (BOE) as one of the first Central Banks to initiate CBDC research. In the paper, the BOE proposed questions as to why a central bank might issue a CBDC. The BOE is still exploring the tradeoffs between direct and hybrid models, but according to the latest discussion paper, it is leaning towards a hybrid model.
In 2018, the Bank of Ghana announced its research and the possibilities for a pilot CBDC project in a sandbox environment. The Bank of Ghana notes the benefits of financial inclusion and reaches a large percentage of the unbanked population.
In 2019, according to the La Banque de la République d’Haïti, the bank is currently “considering a pilot to create a digital version of the Haitian Gourde, which aims to improve the domestic payments system and promote financial inclusion in Haiti.”
In May 2020, Kazakhstan officials revealed the nation’s digital currency development plan as a part of a government strategy to become a center for the global block reward mining sector. A senior Kazakh government adviser proposed introducing blockchain technology and the digital tenge, intending to combat corruption and ensure transparency in allocating state budget funds. In June, Kazakhstan adopted a development outline for blockchain and digital technology. At present, the Central Bank of Kazakhstan is demonstrating the feasibility of introducing the CBDC tenge.
The Central Bank of Iceland released a special publication investigating a national CBDC entitled “Rafkróna?” in September 2018. This paper determined the value of physical cash, compared existing fintech solutions, and spoke on how a CBDC would affect the various stakeholders in Iceland’s financial ecosystem.
The Reserve Bank of India (RBI) published its 2020-21 Report on Currency and Finance. The report noted some observations about CBDC, including benefits such as monitoring transactions and distributing, yet the report didn’t reveal any concrete future plans.
In November 2017, the Bank of Israel appointed a team to research the advantages and disadvantages of issuing a central bank digital currency. The findings of the team’s research were published in November 2018 and recommended against issuing a digital currency soon. However, the team will continue to monitor significant developments with CBDCs around the world.
In early 2020, the Bank of Jamaica expressed its interest in exploring a CBDC. In a July 2020 press release entitled “BoJ Opens Door To Central Bank Digital Currency,” the Bank of Jamaica invited CBDC providers to submit development and testing plans for CBDC solutions in a controlled environment in its recently established Fintech Regulatory Sandbox. Financial inclusion, improved management processes, costs, and commitment to Jamaica’s transition to a digital economy were cited as the primary benefits that Bank of Jamaica anticipated achieving with CBDC.
In 2018, the Bank of Lithuania announced the idea of issuing the first blockchain-based digital collector’s coin, LBCOIN, as a part of a more comprehensive CBDC research. The LBCOIN design consists of one physical silver collector coin and six digital tokens. In 2020, the Bank of Lithuania began a pilot test, releasing 24,000 digital LBCOINs. Users that purchase LBCOINs will receive a set of six digital tokens. These digital tokens can then be exchanged for a physical silver collector coin.
Malta was amongst the first jurisdictions to enact a comprehensive legal framework covering both the technology and the matter’s financial services aspects. The Virtual Financial Assets Act, 2018, regulates the field of Initial Virtual Financial Asset Offerings and Virtual Financial Assets and provides for ancillary, incidental, or connected matters.
In 2021, Morocco’s Bank-Al-Maghrib announced that it would seek to identify and analyze the advantages and drawbacks of CDBCs for the Moroccan economy.
The Dutch Central Bank (DNB) published a bulletin stating that it wants to play a leading role in Europe’s CBDCs. Later the DNB released a report arguing that if there is no CBDC, then private payment platforms will eventually replace public cash. So a CBDC maintains the public role of money.
🇰🇵 North Korea
According to a Vice News report on September 18, the Central Bank of the Democratic People’s Republic of Korea is allegedly developing its cryptocurrency to evade international US sanctions and find a way around “the U.S.-dominated global financial system. The North Korean authorities announced their readiness to issue digital money and even indicated the availability of all required resources — both technical and human — to implement this task.
In 2018, the Norges Bank released a paper entitled “Central bank digital currencies” outlining the benefits and consequences of implementing a CBDC. “Norges Bank will continue to issue cash as long as there is demand for it. But when cash usage declines, a CBDC can be an alternative to deposit money. In Norway, the Reserve Bank confirmed that they are not in a rush to issue a digital Krone, even though only 4% of payments are made using cash. The share of cash payments is lower in Norway than in any other country.” – Ida Wolden Bache, deputy governor at Norges Bank.
West Bank-based Palestine’s Monetary Authority (PMA) has indicated that leaders are mulling plans to issue a Palestinian digital currency as a move to skirt Israel’s robust control over the Palestinian economy. Currently, Palestinians have no formal currency of their own and use a mix of the US dollar, the Euro, the Jordanian dinar, and the Israeli shekel in their daily lives. It is currently unclear how the e-pound would skirt the 1994 Paris Protocol agreement, which gave the PMA the required functions of a central bank, yet without the ability to issue currency. The Paris Protocol recommended that Palestine uses the Israeli shekel and explicitly gives Israel an effective veto over any forthcoming Palestinian currency.
The Philippine Central Bank has formed a committee to consider the implication of issuing a CBDC.
After years of being anti-crypto, Russia has softened its cryptocurrency stance, with moves to legislate the digital asset beginning in 2017. The Bank of Russia’s deputy governor Alexey Zabotkin announced that the Bank is planning to complete a prototype digital ruble by late 2021. The digital ruble will be issued along with the currently existing forms of money, enabling users to credit digital rubles to their electronic wallets and use them online and offline.
In its 2020-2024 strategic plan, the Bank of Spain declared that it would focus on design proposals for a CBDC.
March 2020 – The Swiss Federal Council published a report on the benefits and risks of a central bank digital currency e-franc. In their findings, the Federal Council concluded a “universally accessible central bank digital currency would bring no additional benefits for Switzerland at present.”
December 2020 – Switzerland’s Central Bank (Swiss National Bank) pivoted to testing CBDCs for wholesale transactions between financial institutions SNB successfully tested using digital money to settle large-scale transactions between financial institutions. SNB remains undecided on issuing its digital currency.
In November 2019, a false report made the rounds of reputable crypto media websites stating that Tunisia partnered with a Russian blockchain platform to issue the “first CDBC.”
In a statement released a few weeks later, the Central Bank of Tunisia acknowledged that it is currently in the research and consideration phase of exploring a CBDC.
🇺🇸 United States of America
In February 2021, the Federal Reserve published “Preconditions for a general-purpose central bank digital currency,” which detailed that the next step would be broadly engaging the public regarding the pros and cons of a US central bank digital currency (CBDC). Additionally, the Federal Reserve Bank of Boston announced it would work with researchers from MIT’s Digital Currency Initiative (DCI) on a “multi-year collaboration” to build and test a “hypothetical” open-source central bank digital currency platform.
With the official currency, the Bolivar plummeting due to high inflation rates, the Central Bank of Venezuela announced its crypto asset in April 2018. The Central Bank of Venezuela to launch the ‘petro oro,’ a form of crypto-based savings where members of the public can invest in the ‘petro’ or gold itself. The Petro, which is now mandatory for gas stations in the country to support.
The Central Bank of Denmark explored the viability of a national digital currency (E-kroner) in 2016 and 2017. In a 2017 analysis paper, the Central Bank states, “The potential benefits of introducing central bank digital currency for households and businesses in Denmark would not match the considerable challenges this introduction would present. Danmarks Nationalbank, therefore, has no plans to issue central bank digital currency.” Citing Denmark’s existing secure and effective payment infrastructure, the report noted that the efficiency gains from a CBDC do not outweigh the risks of financial instability. A CBDC can lead to the risk of systemic bank runs.
The Ecuadorian Government announced an electronic currency, dinero electrónico, or DE in 2014. The Government spends more than $3 million every year to exchange deteriorating old notes for new dollars. By February of 2015, the DE was acting as a practical means of payment. Yet, 71% of accounts opened remained inactive as citizens were reluctant to accept a new currency and generally mistrusted the Government.
The Bank of Finland launched the Avant smart card system in 1993, which can easily be considered the world’s first CBDC. The goal was to set up a single national electronic purse system. Avant failed due to competition from ATMs. 2020 – The Bank of Finland Governor Olli Rehn believes a digital euro is “very likely” to debut in Europe in the next ten years.
🇳🇿 New Zealand
October 2020 – Christian Hawkesby, assistant governor at the Reserve Bank of New Zealand, claimed that the country has “no imminent plans” to issue a CBDC.