China and Japan Leading CBDC Proof-of-Concept Programs: Bison Trails Report
Central bank digital currencies (CBDCs) are rapidly moving towards global implementation, per a report from Bison Trails.
According to the blockchain startup, several countries are exploring the use cases for CBDCs. Bison Trails puts this figure at a whopping 80% of Central banks.
40% of these countries are already testing proof-of-concept programs. These countries include Hong Kong, Thailand, China, Australia, Singapore, Sweden, Japan, UAE, Marshall Islands, Uruguay, Ukraine, and the Bahamas.
Facebook-backed Diem Motivating Central Banks
The Bison Trails report took a deep dive into how the CBDC all started examining the role played by private digital currencies like Facebook-backed Diem, formerly known as Libra.
According to the report, Diem was a major catalyst that propelled central banks into considering launching CBDC projects.
When Diem (before the change of name and structure) was first introduced years ago, offering a permissionless, global digital currency for the public, it got a lot of regulatory backlashes.
Central banks and government officials worldwide ruled against and denounced the project as they were worried that Libra could undermine sovereign currencies like the dollar.
However, it wasn't long before the central banks realized they needed alternatives to what Libra was offering. This birthed growing interest from countries like China to accelerate its plans for the issuance of its digital currency. The report states in part:
“Along with protecting monetary sovereignty, CBDCs are seen as a new means of spurring technological innovation and promoting economic inclusion within a nation and globally.”
According to the paper, Diem is still motivating the increase in CBDC projects following their latest plans to roll out a US dollar-pegged stablecoin later this year.
The Diem association, which comprises several financial firms, including Coinbase, will work with Silvergate Bank to issue the Diem USD and maintain its reserves.
Central Banks Making Progress With CBDC
Although several countries are moving forward with their CBDC plans, China has made its intention to establish itself as a central player in the emerging global digital currency market clear.
The country has reportedly started testing the digital yuan with commercial institutions and citizens in various communities across different states.
Countries like Norway have begun exploring CBDCs, too, and even recently disclosed that it would start testing technical CDBC integrations. In the UK, the Bank of England and HM Treasury have collaborated to create a CBDC task force to coordinate the exploration of a potential UK CBDC.
On the other hand, the US is still taking a cautious approach towards testing or exploring CBDCs with no firm announcement on the matter yet.