CDBC Craze: More Countries and Tech Giants Adopting Digital Currencies

A digital reality is getting closer, and central banks are on the cutting edge of adopting new technologies. 

The president of Brazil’s central bank Roberto Campos Neto recently sat down with Bloomberg TV, saying that Brazil’s banking system’s heavy modernisation is now underway. The result of these efforts will be available for public real soon — a designated central bank digital currency.

“I think the digital currency is not the cause, it’s the consequence. For you to have that, you have to have in place a system of instantaneous payments that is efficient and interoperable, you need to have an open system in which you can create competition, and you need to have a currency which has credibility, is convertible and is international. Then I think you have all the ingredients to have a digital currency. We think we’re going to get to that by 2022,” Neto promised.

The date also coincides with the launch of a digital RMB, DC/EP project by the People’s Bank of China. The bank’s officials recently announced that a digital yuan could be ready for use during the 2022 Winter Olympics. 

Geopolitical cause
A lot of countries have been testing and researching digital currencies over the last decade, but on the frontline there is always a power trio: the United States dollar, the euro, and China’s yuan. 

Dutch fintech-focused non-profit think tank dGen just released a report: “CBDCs: Geopolitical Ramifications of a Major Digital Currency.” Research being back by the likes of the European Central Bank (ECB), Standard Chartered Bank, and the Frankfurt School, it releases some great conclusions on the impact of CBDCs on the global financial system.

According to dGen, three to five nations globally will switch from fiat national currency system to CBDCs by 2030. As an example, the report names Sweden with its e-krona project, which predicts a cashless future in the country in just 5 years.

By that time, if the European Central Bank doesn’t pick up the Swedish digital path to develop a digital euro, dGen researchers think that the field will be overtaken by China’s fast-growing DC/EP project. 

Philipp Sandner, head of the Frankfurt School Blockchain Center, criticized the ECB for its apparent lack of action:

“The ECB’s reaction has been too slow. Especially, the benefits from a CBDC for the industry, e.g., based on programmable money, are currently neglected. Given Libra and the DC/EP [digital yuan], the ECB has to react quickly to keep its geopolitical position.”