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Retail CBDC Projects More Advanced in Emerging Economies, Report

2 mins
Updated by Ana Alexandre
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In Brief

  • According to a PwC report, retail CBDC projects are more advanced in the emerging economies.
  • The report distinguishes between retail CBDCs intended for commercial use, and wholesale CBDCs intended for interbank settlements.
  • A pair of retail CBDC projects are live, while wholesale CBDC projects have much longer pilot periods.
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Retail central bank digital currencies (CBDCs) are more advanced in emerging economies, according to the Global CBDC Index 2021 from global consultancy firm PricewaterhouseCoopers (PwC).

With its inaugural report, PwC sought to assess the level of maturity central banks have achieved in deploying digital currencies. It provides a synthetic index, based on central banks’ progress, perspectives on CBDC development, as well as public interest. 

The report distinguishes between two types of CBDCs. First, there are retail CBDCs, which citizens and businesses can hold and use as a form of digital cash. Then, there are wholesale CBDCs which would generally be restricted to financial institutions. These institutions would primarily use them for interbank payments and financial settlement processes.

Appraising the two approaches, the report highlighted that retail CBDCs already have two live projects in the Bahamas and Cambodia. The report says the digital yuan project in Mainland China is merely at an advanced level of trialing.

On the other hand, no wholesale CBDC projects have reached maturity so far. However, nearly 70% of declared wholesale projects have started running pilots. Meanwhile, only 23% of retail projects have reached this implementation stage.

Retail CBDC projects are at a more advanced stage

Despite the smaller proportion, retail CBDC projects seem to be at a more advanced stage, particularly in emerging economies. The report lists the Bahamas, Cambodia, China, Ukraine, Uruguay, Ecuador, the Eastern Caribbean, Sweden, South Korea, and Turkey as having the most mature retail CBDC projects. 

They are ordered by the index used in the report, meaning the Bahamas is the most advanced, followed by Cambodia, then China, and so on. These places generally list financial inclusion as an expected outcome for their retail CBDCs. 

More advanced countries conduct wholesale efforts

According to the report, wholesale CBDC projects have on average shorter research stages than retail programs. However, their pilot stages tend to be much longer, which is why so far none have gone live. The report lists Thailand, Hong Kong, Singapore, Canada, the UK, France, South Africa, Europe, the United Arab Emirates, and Japan as having the most mature wholesale CBDC projects, also in declining order of the index. 

The report notes that more advanced countries are mostly conducting wholesale efforts. These typically have more developed interbank systems and capital markets. The majority of these projects also facilitate cross-border connectivity and interoperability. This stands in contrast to the financial inclusion priorities of retail CBDCs. 

The report noted that its index also incorporated studies of four other digital finance and currency projects. It specifically cited those in Switzerland, Italy, and the U.S., as well as the European Central Bank’s retail digital euro, which it described as advanced.

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Nicholas Pongratz
Nick is a data scientist who teaches economics and communication in Budapest, Hungary, where he received a BA in Political Science and Economics and an MSc in Business Analytics from CEU. He has been writing about cryptocurrency and blockchain technology since 2018, and is intrigued by its potential economic and political usage.
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