Focus may be on China’s progress with the digital yuan — and whether the dollar’s dominance will be threatened — but in the last few days, a slew of announcements has shown that advances are being made elsewhere.
The Bank of International Settlements (BIS) has estimated that 86 percent of the 65 banks polled said they were at least in the opening stages of creating a digital currency, with 15 percent embarking on pilot programs.
Pakistan is in the planning stages of examining digital fiat, according to a report in The Express Tribune, in a way that will expand the banking network and also help fight money laundering. The digital currency would be used, in part, for government disbursements, also helping to broaden financial inclusion.
“Pakistan has 60-70 percent infrastructure in place for introducing a digital currency,” The Express Time reported, quoting tech expert Noman Said, who played a critical role in developing a smart city in Islamabad.
At least some of the way might be paved for a wider embrace of digital payments and currencies in particular, as mobile and online banking soared by hundreds of percentage points amid the pandemic.
‘Cashless’ Norway Making CBDC Headway
Nations that are already well-entrenched in shifts to cashless interactions are also readying for a central bank digital currency (CBDC) — notably, Norway.
As PYMNTS reported, the country’s central bank plans to take two years to learn more about the creation and issuance of a CBDC, testing technical solutions to make sure it has a firm grasp on the “purpose and consequences” of launching a digital currency. To get a sense of just how cashless the country is, less than 4 percent of transactions are done with coins and bills. (Sweden, where 9 percent of transactions are done with hard cash, is also exploring a digital currency and has stated the launch may take five years.)
U.K. Task Force
The Bank of England is setting up a task force focused on exploring the design and launch of a digital version of the pound. As PYMNTS reported late last week, the task force, comprised of the Bank of England and the U.K. Treasury, would examine a national version of fiat done digitally to be issued by the central bank.
In comments provided to PYMNTS last week, Dan Morgan, European policy lead at Plaid, said the “announcements are a clear signal that the government sees both the potential of the FinTech sector as a growth engine for global Britain … the exploration of a new central bank digital currency through a joint taskforce — something we’ve seen in Asia, and what many argue will be the future of fiat currencies across the world — shows how far the digitalization of financial services has come.”
At a high level, in a report titled “Future of Money: Crypto, CBDCs and 21st Century Cash,” Citi’s global research team posited that Digital Money 2.0 will move beyond the account-centered movement of electronic money that has been a hallmark of financial services today.
Digital Money 2.0, the paper stated, would be based on tokenization, which would include CBDCs.
“We are at an inflection point in the history of money,” wrote the authors, “faced with different paths to modernize payments” — and as those paths are carved, different digital form factors will co-exist.
The increased interest in cryptocurrencies, such as Bitcoin and Ethereum, Citi said, has been a tailwind for the development of digital money.
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