The world is waiting to hear what the US Securities and Exchange Commission (SEC) will do next in regards to crypto. With no concrete updates, countries continue with their preparations for a wholesale or retail CBDC system.
The “wholesale cbdc” is a weekly newsletter that provides updates on the progress of countries in building their own wholesale and retail CBDCs.
While Bitcoin, Ethereum, and the larger digital assets market have recently captivated investors with their ascents to new all-time highs, CBDC development is still underway. The following are a few recent instances of this, with comments from a variety of nations.
Is it a legal tender?
The merits and downsides of a “digital euro” are discussed in a new paper from the European Central Bank (ECB). An inquiry on the appropriate structure of a CBDC is being conducted in order to optimize the former while limiting the latter. The following are the most important questions that need to be answered.
- What are the applications of a digital euro?
- What would a digital euro look like in comparison to present retail payment systems?
- In terms of fees, charges, and so on, how will intermediaries operate?
- What capabilities/features would a digital euro have built-in?
- Is a digital euro going to be accepted as legal tender?
- From a technical viewpoint, how can each of the following questions be answered?
While several nations are coping with similar issues, one that sticks out is the likelihood of the digital euro becoming legal cash. Many people believe that a digital asset issued by a central bank is deemed legal money, although this is clearly not the case. Regardless of this potential, the ECB’s Fabio Panetta recently told Bloomberg that “without having legal-tender status for an extra instrument issued by a central bank would be extremely problematic.”
CBDC in bulk
The great majority of CBDCs under construction are aimed at the retail sector. However, another implementation, known as the wholesale CBDC or ‘wCBDC,’ exists and might be implemented in the next months.
A wCBDC differs from a standard CBDC in that it is designed to handle settlement procedures rather than day-to-day expenditure. The Swiss National Bank (SNB) and Six Digital Exchange (SDX) are working to establish a wCBDC, which is the most prominent example. This relationship, which was created in 2019, is expected to start paying off shortly, with the wCBDC set to open in early 2022.
The SNB’s Thomas Moser recently talked with CoinDesk on the possibility of a wholesale CBDC, saying, “I would say we would be ready to go live in January, and it just requires a policy decision and the issue of whether we could legally execute a wholesale CBDC… But we’d be theoretically ready to go live with a wCBDC on SDX.”
While digital assets such as CBDCs have the potential to change the way we interact and promote financial inclusion, they are not a one-size-fits-all solution. To be genuinely transformative, they must be applied in areas where physical currency is still used. However, in many nations, such as Singapore, this may no longer be the case.
“The financial inclusion advantages of a digital Singapore dollar are not convincing,” said Ravi Menon, Managing Director of the Monetary Authority of Singapore (MAS), during a FinTech conference recently. Electronic payments are prevalent, extremely efficient, and competitive in Singapore, with a high percentage of Singaporeans having bank accounts.”
With this in mind, the MAS continues to investigate and create a prospective CBDC. It’s merely doing due diligence in case it decides to launch one in the future.
If the MAS decides to create a CBDC in the future, Mellon cites the following as the main reasons.
- As a consequence of being state-issued, there is a high level of safety and universal acceptability.
- Encourage the development of more inclusive and efficient payment systems.
- Stop private stablecoins from acquiring momentum and influence in Singapore’s financial system.
The “cbdc countries” is a weekly publication that covers the development of wholesale and retail CBDCs.
Frequently Asked Questions
Which countries have launched CBDCs?
A: CBDCs were launched in the following countries. Country Country Date Australia March 26, 2019 Canada April 4, 2019 Chilean Republic June 5th, 2018 El Salvador November 7th, 2017 Hong Kong October 23rd 2011 Israel July 1st 2013 Malaysia December 13th 2014 Mexico January 18th 2015 Peru May 19th 2016 Philippines June 27 th , 2018 Singapore September 30 th , 2023 Switzerland February 25 th , 2022 United Kingdom August 8 th 2021 Uruguay January 10 nd 2020
How many countries are in CBDC?
A: There are currently 185 countries in the world.
Which country has CBDC?
A: China has a Central Bank Digital Currency.
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