Speaking at the launch of the Bank for International Settlements’ London location, Andrew Bailey expressed his optimism concerning central bank digital currencies (CBDCs).
Andrew Bailey, the Governor of the Bank of England (BoE) stated that he was pleased that central banks have begun to embrace the idea of CBDCs. “If this comes to pass, it will be one of the most fundamental innovations in the history of central banking,” he said. “It will move us into a new era.”
Britain’s central bank has not been shy about the fact it is researching its own digital currency. Eventually, the digital currency could replace cash and credit as forms of payment. While Britain has yet to make a decision on whether it will introduce a CBDC into the U.K., it is currently mulling over the pros and cons with stakeholders.
Bailey went on to state that “the prospect of stablecoins as a means of payment and the emerging propositions of CBDC has generated a host of issues that central banks, governments, and society as a whole, need to carefully consider and address.”
BoE not alone in the quest for a functioning CBDC
While England and a number of other countries look into CBDCs to modernize their financial systems, a few countries have a significant head start.
China is the obvious front runner in the race toward the release of a nationwide CBDC. The digital yuan has been under development since 2014 but has yet to roll out the product on a large scale. Instead, it is currently testing them in specific regions around China.
Most recently, Shanghai announced it would airdrop over $3 million in digital yuan in a lottery-style system. The same week, Beijing distributed 200,000 envelopes with 200 digital yuan each in them, as part of the ongoing tests.
Another country that is making big moves towards a CBDC is the Bahamas. According to a PwC report, the Caribbean island is number one in the world in retail CBDC development. The Bahamian Sand Dollar wins out, because it is already live and in use. Almost 25% of pilot programs in the Bahamas have moved on to the implementation stage.
The PwC ranks Cambodia next in retail CBDC development, with China third. The National Bank of Cambodia began developing their currency, Bakong, back in 2018 and is considered the only other project that is “live,” aside from the Bahamas.