IMF Says There is Growing Increase in CBDC Research

The use of Central Bank Digital Currencies (CBDCs) has grown rampant in many nations across the world. 

CBDCs are digital representations of cash, most times a legal tender. It has been around for over thirty years. The Avant smart card, launched in 1993 by the Bank of Finland, can be regarded as the first form of digital cash and in today’s world, it can be regarded as the first CBDC.

Advancement in technology has led to an even wider proliferation of CBDC. More than half of the world’s central banks are currently exploring the potential and benefits of a CBDC in their financial economy. 

Central Banks CBDC Research Going Mainstream

While a few Central Banks have launched their CBDCs, some others have launched a research program into the use of a central bank digital currency. One of these is the Bank of England which recently teamed up with the Massachusetts Institute of Technology (MIT) Media Lab Digital Currency Initiative (DCI) for a one-year research program on CBDC. 

Although no functional CBDC has been released to that effect, for now, the bank noted that it is only for research purposes. 

The Reserve Bank of Australia also released results from its two years research project dubbed ‘Project Atom’ into wholesale CBDCs that puts light on the benefits of autonomizing and digitizing manual, paper-based banking processes using distributed ledger technology (DLT). the research was conducted in collaboration with the National Australia Bank (NAB), the Commonwealth Bank of Australia (CBA), ConsenSys, and Perpetual. 

Similarly, the governor of the Qatar Central Bank Sheikh Bandar announced that the bank is working on the development and issuance of the Qatar digital currency. The governor said “we are still in the foundation stage. We are evaluating the pros and cons of issuing CBDC and finding the proper and right technology and platform to issue our CBDC.”

Of the over 100 CBDC research program which has started, so far, only two of the research has led to the eventual launch of an actual CBDC. 

Citizens and residents of the Bahamas are now able to spend the Sand Dollar after it was launched in October 2020. This is possible through the use of PopPay, a tech startup providing security services for the fintech space. The users only have to go through facial recognition ID verification through PopPay. 

The Nigerian e-naira with new features has also been launched.