The global CBDC race is hotting up. Several countries, including China, Hong Kong and India, have already launched their digital currency pilot programmes. Since then, Central Bank digital currencies (CBDCs) have shown considerable merit as a quick and efficient means of value transfer, both locally and internationally. What’s more, is that the transaction records are completely traceable and tamper-proof.
As such, several more countries are looking to launch their CBDCs, at least through a pilot programme, to ascertain how these blockchain-based currencies could help their respective economies. The latest countries to enter the CBDC race are Russia, Japan and Ukraine and each of them plans to launch their pilot programmes before the end of the year. Tag along as we go over the CBDC plans of these major nations and how they intend to roll out the blockchain-based versions of their fiat currencies.
Japan
On Feb 17, the Bank of Japan announced that its CBDC would enter a pilot programme in April this year. This announcement comes after two long years of research and rigorous proof-of-concept tests. The pilot programme will be rolled out in multiple phases. The first phase will not have any external participants and will be tested using simulators. However, in the coming phases, the country’s CBDC will see integrations with banks and other intermediary networks that will test the end-to-end flow of transactions. Eventually, the Digital Yen will also be rolled out to the private sector. In this phase, special attention will be paid to offline payments and the challenges of user touchpoints.
The launch of Japan’s pilot CBDC programme comes after two proof-of-concept rounds. And now, with the imminent launch of the Digital Yen, private sector players have already started to lay their groundwork for the CBDC. For instance, JCB, one of the country’s leading card payment networks, is currently working with a firm known as IDEMIA to develop a proof-of-concept that will integrate the CBDC within its existing payment network. IDEMIA recently won international accolades for its offline CBDC wallet solution.
Russia
On the same day as Japan, Russia also announced the upcoming launch of its CBDC pilot programme. However, unlike its Asian counterpart, Russia’s pilot programme will see real-world retail usage right from day one of the pilot. The CBDC will be provided to a select group of citizens through 13 shortlisted banks. The digital currency will also be accepted by a limited number of merchants.
This consumer pilot programme was supposed to be launched in 2024. However, with western sanctions on SWIFT transfers weighing down on the country’s economy, officials have decided to speed up the CBDC process, with the pilot programme slated for launch on April 1 this year.
Ukraine
On Feb 15, Ukraine announced the preponement of its CBDC pilot project and confirmed an unveiling sometime this year. Previously, the pilot phase was set to begin in 2024. However, Ukraine is on a mission to speed up its Digital Transformation, and that’s good news for the nation’s electronic hryvnia (e-hryvnia). This update was provided by Mykhailo Fedorov, the head of Ukraine’s Ministry of Digital Transformation and the country’s deputy Prime Minister. In the same interview, Fedorov also revealed that the first transactions using the digital hryvnia have already taken place.
The entire endeavour began back in January 2021, when the Stellar Development Foundation was chosen to support Ukraine’s CBDC project. At that time, the project was scheduled for completion and full rollout by 2025. However, with the pilot programme being preponed by a year, we could see the e-hryvnia in action much sooner.
Conclusion
More countries releasing their CBDCs is a good thing for blockchain technology. It will help bring digital assets into the fold and this could boost the adoption of cryptocurrencies. The introduction of global CBDCs will also ensure a much quicker and way more affordable means to transfer value, domestically and internationally. As such, the CBDC racing heating up is all good.
