The Rise of Digital Fiat Money
In an era where digital transactions are becoming the norm, central banks worldwide are keenly exploring the next evolution of money: Central Bank Digital Currencies (CBDCs). A CBDC is essentially a digital form of a nation’s fiat currency, issued and backed by its central bank. As societies increasingly move towards cashless payments, central banks recognize the critical need to offer a public digital currency option to remain at the forefront of monetary innovation and maintain control over their financial systems.
**Explore the map below to discover the CBDC status of different countries. Hover over a country for a quick overview, or click to delve deeper into specific details.**
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Global CBDC Adoption: Key Findings
The global landscape of CBDC exploration is rapidly evolving. As of February 2025, a staggering 134 countries and currency unions, representing 98% of the global GDP, are actively engaged in exploring CBDCs. This marks a dramatic increase from just 35 countries in May 2020, demonstrating the accelerating global interest in digital fiat currencies. Currently, 66 countries are in advanced stages of CBDC development, encompassing development, pilot programs, or full launch.
Global landscape of CBDC exploration with 134 countries representing 98% of global GDP.
G20 Nations Leading the Charge in CBDC Development
The world’s leading economies are at the forefront of CBDC innovation. Every G20 nation is currently exploring a CBDC, with 19 of these countries having reached advanced stages in their CBDC initiatives. Notably, 13 G20 countries are already piloting CBDCs, including major economies like Brazil, Japan, India, Australia, Russia, and Turkey. This widespread engagement among G20 nations underscores the potential for CBDCs to reshape the global financial system.
Live CBDCs: Bahamas, Jamaica, and Nigeria Pave the Way
While many countries are still in the exploratory or pilot phases, three nations have already fully launched CBDCs: the Bahamas, Jamaica, and Nigeria. These early adopters are demonstrating the real-world viability of digital fiat currencies. In Nigeria and the Bahamas, CBDC adoption is showing significant growth, indicating increasing public acceptance and usage. All three countries are prioritizing the expansion of their retail CBDCs within their domestic economies, focusing on practical applications and broader accessibility.
CBDC Pilot Programs Surge Worldwide, Including Digital Euro Initiatives
The number of ongoing CBDC pilots has reached a new high of 44, signaling an intensified phase of experimentation and refinement. This surge includes significant developments in Europe, with both Eurozone countries and nations outside the Euro area actively testing wholesale CBDCs. These European pilots are increasingly focusing on both domestic and cross-border applications, exploring the potential for CBDCs to enhance efficiency and interoperability in international payments.
BRICS Alliance Explores CBDCs as an Alternative Financial System
The original BRICS member states – Brazil, Russia, India, China, and South Africa – are all currently piloting CBDCs. This collective engagement within the BRICS bloc is particularly noteworthy as these nations have been increasingly vocal about developing alternative payment systems to reduce reliance on the US dollar. CBDCs are viewed as a potential cornerstone of this strategy, offering a pathway to greater financial autonomy and potentially reshaping global economic power dynamics.
Intermediated CBDC Models Preferred in Advanced Projects
A key trend emerging in advanced retail CBDC projects is the preference for intermediated models. This means that CBDCs are not directly issued to the public by central banks but are instead distributed through existing financial institutions, such as banks, financial service providers, and payment processors. This approach leverages the established infrastructure and expertise of the private sector, potentially mitigating risks and facilitating smoother integration into the existing financial ecosystem.
United States Enters Cross-Border CBDC Collaboration
The United States, while still navigating the political and regulatory landscape of CBDCs, is now actively participating in international CBDC initiatives. The US is involved in Project Agorá, a cross-border wholesale CBDC project in collaboration with six other major central banks. Domestically, the CBDC debate continues, with the US House of Representatives passing a bill to prohibit the direct issuance of a retail CBDC. However, the Senate has yet to act, and CBDCs remain a prominent topic in ongoing US political discourse, especially in the context of the presidential campaign.
Cross-Border CBDC Projects Double Amid Geopolitical Shifts
Geopolitical events, such as Russia’s invasion of Ukraine and the subsequent G7 sanctions, have significantly accelerated the development of cross-border CBDC projects. Since these events, the number of cross-border wholesale CBDC projects has more than doubled, now totaling 13. These initiatives include Project mBridge, a prominent project connecting banks in China, Thailand, the UAE, Hong Kong, and Saudi Arabia. Project mBridge is anticipated to expand further in the coming year, potentially creating a significant new infrastructure for international payments.
Digital Yuan (e-CNY) Leads Global CBDC Pilot Programs
China’s digital yuan (e-CNY) remains the world’s largest CBDC pilot program. As of June 2024, the e-CNY has achieved a staggering total transaction volume of 7 trillion e-CNY ($986 billion) across 17 provincial regions in China. Its applications span diverse sectors, including education, healthcare, and tourism, demonstrating its broad utility. This figure represents nearly a fourfold increase from the 1.8 trillion yuan ($253 billion) recorded in June 2023, highlighting the rapid growth and adoption of the e-CNY within China.
Digital Yuan (e-CNY) transaction volume reaching 7 trillion e-CNY (6 billion) in June 2024.
Cross-Border CBDC Initiatives: A Closer Look
Click on a project to explore participating countries and specific use cases
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The CBDC Timeline: Tracking the Evolution
Number of countries and currency unions exploring CBDC over time
CBDCs in Circulation: Real-World Impact
Understanding CBDCs: The ABCs
What Exactly is a CBDC?
A Central Bank Digital Currency (CBDC) is more than just a digital representation of money; it’s a digital form of a country’s fiat currency and a direct liability of the central bank. Unlike traditional physical cash, CBDCs exist purely in electronic form. Instead of central banks printing banknotes and minting coins, they issue digital currency units, essentially electronic coins or digital accounts. These digital forms are backed by the full faith and credit of the national government, just like physical fiat currency. This backing is a crucial differentiator from cryptocurrencies.
CBDCs vs. Cryptocurrencies and Stablecoins: Key Differences
While the digital currency landscape is populated by various forms of digital money, including thousands of cryptocurrencies, CBDCs are distinct. Cryptocurrencies, like Bitcoin, operate on decentralized networks using distributed-ledger technology (blockchain). This means transactions are verified by a network of computers worldwide, rather than a central authority. Stablecoins, another type of cryptocurrency, aim to maintain a stable value by pegging their value to an external asset, often a fiat currency like the US dollar. In contrast, a CBDC is centralized. It is issued and regulated by the central bank, giving it the stability and backing of the national monetary authority, which cryptocurrencies and stablecoins lack.
The Driving Forces Behind CBDCs: Motivations and Objectives
Governments are exploring CBDCs for a variety of compelling reasons, and the specific motivations often depend on a country’s unique economic context and priorities. Common drivers include:
- Enhancing Financial Inclusion: CBDCs can provide easier and safer access to digital payments for unbanked and underbanked populations, reducing reliance on cash and promoting broader participation in the formal financial system.
- Promoting Payment System Competition and Resilience: Introducing a CBDC can foster competition and innovation in the domestic payments market, potentially incentivizing existing payment providers to offer cheaper, more efficient, and more user-friendly services. It also provides a public option, increasing the resilience of the payment infrastructure.
- Increasing Payment Efficiency and Lowering Transaction Costs: Digital currencies can streamline payment processes, potentially reducing transaction costs associated with traditional payment methods, benefiting both consumers and businesses.
- Enabling Programmable Money and Transparency: CBDCs can be designed with programmable features, allowing for more efficient and transparent implementation of monetary and fiscal policies. This programmability can also facilitate conditional payments and smart contracts.
- Facilitating Seamless Monetary and Fiscal Policy Implementation: CBDCs can provide central banks with new tools for implementing monetary policy and distributing fiscal stimulus, potentially leading to more effective and targeted interventions.
Navigating the Challenges of CBDC Implementation: Risks and Considerations
Despite the potential benefits, the implementation of CBDCs presents significant challenges that require careful consideration and mitigation strategies:
- Bank Disintermediation and Financial Stability Risks: The introduction of CBDCs could potentially lead to bank disintermediation if individuals and businesses shift large deposits from commercial banks to CBDCs, especially during times of economic uncertainty. This could trigger bank runs, reduce banks’ lending capacity, and destabilize interest rates, particularly in countries with fragile financial systems.
- Operational and Cybersecurity Risks: As digital systems, CBDCs are vulnerable to cyberattacks and operational disruptions. Robust cybersecurity measures and resilient infrastructure are crucial to ensure the security and reliability of CBDC systems and maintain public trust.
- Regulatory and Legal Framework Complexity: CBDCs require the development of comprehensive regulatory frameworks addressing critical issues such as data privacy, consumer protection, anti-money laundering (AML), and combating the financing of terrorism (CFT). These frameworks need to be robust and adaptable to the evolving technological and financial landscape.
CBDCs and National Security: Strategic Implications
The emergence of new payment systems, particularly CBDCs, has significant implications for national security. These implications extend to:
- Impact on Cross-Border Flow Tracking and Sanctions Enforcement: CBDCs could potentially alter the ability of nations, like the United States, to effectively track cross-border financial flows and enforce international sanctions, especially if adopted by countries seeking to evade these measures.
- Geopolitical Consequences and Global Influence: The development and adoption of CBDCs are becoming a geopolitical issue. The absence of leadership from major economies like the US in setting international standards for CBDCs could lead to other nations, particularly China, gaining a first-mover advantage. This could reshape the global financial architecture and potentially shift geopolitical influence in the long term.
Continued research and international cooperation are essential to navigate the complex landscape of CBDCs and harness their potential benefits while mitigating the inherent risks.
Research Team: Ananya Kumar, Alisha Chhangani, Leila Hamilton, and Grace Kim
Contributions from: Nitya Biyani, Stefan de Villiers, Matt Goodman, Niels Graham, William Howlett, Amy Jeon, Reddy Lee, Roberto Lopez-Irizarry, Abhinav Vishwanath, Varsha Shankar, Greg Brownstein, Jessie Yin, and Phillip Meng.
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