Global shift to digital currency as US follows

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A recent study found that 134 countries, representing 98% of the world economy, are actively exploring or implementing digital versions of their currencies. The Atlantic Council, a US-based think tank, reported on Thursday that more than half of these countries are in the development, pilot phase or have already launched digital currencies. their number.

The study shows that all G20 countries, except Argentina, are making progress with digital currency initiatives. However, the United States is notably behind its global partners. While the United States has made some progress on a "wholesale" digital dollar for banking purposes, a digital currency for the general population appears to be at a standstill. Jerome Powell, the head of the Federal Reserve, recently commented that a broader digital dollar is "not imminent."

The delay in the US has become a controversial political topic. President Joe Biden has directed officials to explore the possibility of a digital dollar by 2022, but opposition has emerged, especially from Donald Trump, who has vowed to block its creation. it if he wins the upcoming US election.

The Atlantic Council analyst has pointed to growing differences between the world's largest central banks regarding Central Bank Digital Currencies (CBDCs). He emphasized the significant progress China, Europe and Japan have made compared to the United States.

Proponents of digital currencies say they offer new functions and can replace the declining use of physical cash. However, concerns about privacy and government surveillance have sparked protests in various countries.

Lipsky also warned that the US risks falling behind in the international payments system and potentially losing some global financial influence if it fails to keep up with other countries in setting standards for CBDCs.

Currently, 36 pilot projects for digital currencies are underway globally. China's e-CNY is being tested by 260 million people across 25 cities. The European Central Bank is six months into preparations for a digital euro. The Bahamas, Jamaica and Nigeria have fully functioning digital currencies, while the Eastern Caribbean Monetary Union recently shut down its digital currency initiative due to technical issues preventing users from accessing wallets. their digital.

The study also noted that after Russia's invasion of Ukraine in 2022 and subsequent G7 sanctions, there was a twofold growth in wholesale CBDC development for cross-border transactions. Thirteen cross-border wholesale projects are in operation, including "mBridge", which links China, Thailand, UAE and Hong Kong and will include 11 more countries this year.

All BRICS member states are at advanced stages of CBDC development, with an expected push for alternative payment systems to the US dollar at a summit in Russia later this year.

The European Central Bank's current pilot is seen as a model for other major economies, with predictions of more major launches by 2027.

China's digital yuan pilot, the largest and most advanced to date, has been tested in various applications, including public transportation and purchasing goods. The full launch date of China's e-CNY remains uncertain, with Lipsky suggesting it may not happen this year but could be expected around 2025 or 2026.

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